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June 18, 2019

The madness of talking about budgets


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It’s easy to gang up on the Government and say that they should do this or that (and I would agree and disagree with certain pronouncements like every other person in Ireland) but it is hard to make ends meet unless you are consistently in control of all the variables. Our political system, by and large, does not allow one party to dominate but this did not stop their predecessors calling the shots, albeit very wrongly in hindsight. In some respects, on reflection, there is something to be said about longevity of decision makers.

Contrast this with the financial state of most families in Ireland. Replace the Troika with the Irish State, National Income with personal salary/wages and lower the expenses to be more house related and you have a microcosm of the State Budget condensed to what we all face every day.

In our cases, we are the long-term decision makers of our own future. We can make decisions that will affect us directly rather than indirectly as a result of increased taxes or third-party mistakes. Indeed, the main mistakes that really can affect us emotionally and financially are those that we make ourselves. We call the shots in our own lives and that of our respective families. We are the masters of our own destiny.

Despite this, how many people have addressed their own long-term finances? How many people look at what they really spend on a day to day, week to week basis? How many are striving to build a long-term fund for their own future rather than assume that the State will always be there as a backstop? Surely the ability of successive governments to exert cutbacks is a clarion call for one and all to be self-reliant now and in the future?

Of course, ink is cheap and words can be empty especially if you are unemployed with no immediate hope of employment or do not have the ability to increase your current income. This has not been made easy with the overhang of buy to let debt or bankrupt businesses.

Rather than focus on the past, we should now be thinking of the future. Our future. Everyone needs a personal financial plan. Their own mini State Budget, so to speak, except with the sole focus on their family’s needs. Rather than dwell on the how much tax we have to pay or expenses we still have to support, look at ways that will help around these issues. Talk to the stakeholders. The Government talks to the various interested parties before it strikes its final Budget.

It is incumbent on us all as individuals to draw up our own financial plan and stick to it. A good place to start is the money we currently spend and the prices that we have got comfortable in paying. Sometimes we overlook what we spend just because we have always done it. We live in a different world from what we lived in the Noughties. We need to break the cycle of blaming others and take responsibility for ourselves.

Einstein expressed it somewhat more eloquently when he said that the definition of insanity was doing the same thing over and over again and expecting different results.

The question for all of us is: What result do you want for you and your family?

A good place to start is with a professional financial planner. Not someone who sells life assurance, investments or pension products. A professional financial planner is someone who helps clients focus on their income and expenditure, assets and liabilities and then weaves in what their overall hopes and dreams are for them and their families. To draw up a financial plan requires a confessional of sorts and an ability to look in the financial mirror to recognise our shortcomings. When did you last do this?

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