9 Inflation Busting Tips from a Finance Expert
Mark Coan – Financial expert and Founder of online finance guide moneysherpa.ie
Here are my top 9 ways to save money and beat inflation in 2022. These tips combined will save the average Irish household over €13,000 a year.
The good news is it’s not as hard as you think to save money. With many businesses moving online and comparison sites that will do the heavy lifting for you, big savings are often only a click away.
1. Get all the tax relief you’re owed
There’s a smorgasbord of different tax reliefs you are entitled to as an Irish citizen or resident. The citizen’s information board is always a good place to start, but cutting to the chase the big ones are,
● Marriage tax relief
● Medical or dental tax relief
● And, particularly in 2020/2021/2022, working from home tax relief
Average tax relief saving = €1,880
The good news is there are lots of online services out there, with the biggest being taxback.com, that will file the tax paperwork for you in return for a cut of the refund.
Once you’ve supersized what’s coming in by getting your taxback, the next step is super shrinking what’s going out. You can do this two ways.
1. Buy for less
2. Buy less
Let’s start with the easiest, buy for less. Switching suppliers usually does pay off as companies know most people don’t bother to make the effort. This allows them to keep prices high for existing customers whilst offering sweet introductory deals for new customers.
2. Switch your electricity or gas
Your electricity or gas service is the same no matter who you buy it from, the key thing then is to get the best price.
Lots of new providers have entered the market tempting switching with some great money saving deals.
Example average electricity and gas saving = €500 per year
The average home in Ireland uses 11K kWh of gas (at an average of 12.7c per kWh) and 4.2K kWh electricity (at an average of 37c per kWh) per year.
This means the average gas bill is now €1,320 and electricity now €1,554, or a hefty €2,874 combined. The good news though is much cheaper rates are still available, with gas as low as 10.9c kWh and electricity as low as 28.2c kWh.
Switching to these lower rates would bring your gas bill down to €1,199 and your electricity bill down to €1,184, saving you almost €500 on current rates.
2. Switch your mortgage (even your tracker)
If you are on a tracker mortgage or still on an introductory fixed rate you probably think this one isn’t for you, but hold your horses.
With ECB interest rates on the rise, tracker rates are forecast to rise to 2.5%-4%, higher than current fixed rates, now may be the time to fix your tracker mortgage.
Those rate increases signal good news for people on fixed rates already as well, making it possible to break your fixed rate to re-fix for longer and cheaper without a penalty fee. Check with your current lender to see if you can now ‘break’ from your current fixed rate for free.
Outside of fixed and tracker mortgages a third of all Irish mortgages, almost 200,000, are on variable rates which average 3.5%, the highest rates in Europe. On loans this big there is a massive saving to be had by switching or remortgaging to the 2% fixed rates that are available.
The process is actually quite straightforward using a mortgage broker and they are usually free to use, so it always makes sense to get them to run the numbers and see if it is worth your while to switch.
Example average mortgage switching saving Ireland = €2,164 per year
According to the Irish bank’s industry body the BPFI, the average value of mortgage switched in Ireland last year was €272,000. Switching that amount to a new provider, with a typical outstanding term of 15 years and loan to value of 90% would save you a whopping €2,164 a year. That’s over €32,000 across the 15 years.
4. Switch your Irish Broadband and TV provider
With streaming services now offering not just box sets, but live TV as well there are big money savings to be made by ‘cutting the cord’ from old school TV providers.
Providers like Sky or Virginmedia typically charge around €25 a month for their entry TV pack, even though there is the same content available elsewhere for free. Ditch your current provider and get your sports and live TV from a combination of free to air & streaming, you will save hundreds and still get the same shows.
Example average TV saving = €300
Replacing Sky’s entry and Sky Sports pack at €59 a month with free to air, whilst getting your Sky Sports straight from the NowTV streaming service will save you over €300 a year.
Next up, there are whole industries and armies of people whose job it is to get you to part with your hard earned cash everyday.
The next three top money saving tips will help you avoid the traps and buy less.
5. Don’t blow it, avoid the urge to splurge
The best way to avoid temptation? Don’t put yourself in the way of it in the first place. Why do companies spend millions to push their ads, email lists, get your data, offer you easy credit and offer ‘one click’ payment options?
Yep, so you will spend more. Dun & Bradstreet found We are 12-18% more likely to purchase using credit over cash.
As a savvy money saving consumer, cut this off at source. Don’t sign up to marketing or to one click purchases. Delete your cards from your phone and move your money by standing order every month to a separate savings account where you can’t get at it easily.
Example average saving by hiding the credit card = €1,270
Around €11,000 per household per year is spent on credit cards in Ireland according to the Irish central bank. So according to the Dun & Bradstreet study switching this spend to cash would reduce this by 12% at least, saving €1,270 a year.
6. Ditch the branded groceries and go German
The average Irish household spends over €5,000 per year on groceries. Generic own label products are typically half the price of the leading brands and just as good quality if not better.
Example average own label saving = €1,664
Even allowing for the odd luxury in your basket, knocking a third off your grocery bill by switching to own label or the German discounters is pretty easy. This would give a saving of €1,664 a year for the average Irish household.
7. Become a DIY barista & chef (save €1,521)
When you buy a sandwich, coffee or get a takeaway you’re not just paying for the ingredients, but the whole cost of the seller’s business plus the profit that business is making.
According to Irish coffee house 3fe, of the €3.50 you pay for your regular Americano only 50c is actually spent on coffee and milk.The rest goes on staff, rent, rates etc..
That makes it a staggering 7 times cheaper for you to make your regular latte or macchiato at home. I’m not picking on coffee, the same is pretty much true of any takeaway or eat out you can think of, it’s just a great money saving opportunity.
Example average DIY saving = €1,521
Irish households spend just over €1,000 per year on takeaways and eating out. Add to that €7.50 every working day for you to pop out and grab a sandwich and you get just over €3,000 per year spent on takeaway food and coffees.
We aren’t going to deny you a weekend takeaway or lunch time pick me up, but if you cut by half you are looking at a hefty money saving of €1,521 you would be able to pop in the piggy bank.
8. Cutting out cigarettes & alcohol
Known to Irish finance ministers for decades as the ‘old dependables’, beer & fags are the first place to go to raise tax revenues.
This has made both prohibitively expensive and also a smart go to when you want to raise your own bit of revenue by saving money.
The average Irish smoker spends over €2,200 a year on cigarettes and the average Irish drinker almost €2,000 a year.
Example average ‘old reliables’ saving = €3,232
Based on the averages if you drink and smoke and halve the beer and cut out the fags you would save a whopping €3,232 a year on average. Not to mention the health benefits of cutting down on both.
Next let’s get those interest payments down, nailing money saving tips 1-8, will help you get what you’re owed, buy for less and buy less. This gives you a lot more financial firepower, blasting open the doors on the final money saving tip.
9. Becoming debt free
Outside of your mortgage or student loans which are typically low interest, debt is a money saving blackhole to be avoided at all costs.
Irish households owe €8,000 on average in credit card and loan debt, paying the 4th highest rate of interest in Europe at 10.3%.
The solution is to start paying down your debt, starting with the most expensive first, almost certainly your credit cards. This is known as the ‘snowball‘ effect, where the savings from reducing the interest on one loan can help pay off the next and so on.
Example average credit card and loan saving = €900
With the money savings from tips 1-9 coming to over €12K and the average Irish household debt at €8,000, you should hopefully be able to pay off all your credit card and consumer loans. At the average interest rate of 10.3% that’s a money saving of over €900. Plus a big weight off the shoulders.
What should I do now?
These money savings are based on household averages for Ireland, you will have to take your own case and work out what saving it means for you.
If you want to delve deeper into what you can save and how to do it (and why wouldn’t you?).
You can check out our other guides and money saving tools including our inflation savings buster tool on the moneysherpa.ie website.
Lastly, if you are struggling to make ends meet, you aren’t alone. More than half of all Irish adults say financial concerns are a threat to their mental health. If you are struggling or just need some free independent advice, you should check out the state’s Money Advice & Budgeting Service (MABS) for further help.