The thing is, can any of us really afford to take a one-size-fits-all approach to our finances? What might have worked for your friend of a friend could be the last thing you should do to maximise those all-important investible assets.

Let’s take next door neighbours, Gary and Michael, as our case in point.

Both men are married and live in a semi-detached three-bedroom house with similar features and no extensions or major refurbishments. Gary is 39 and Michael is 38. Gary’s two sons are eight and five years old respectively, while Michael’s son is seven and his daughter is four. The children all attend the same school. Coincidentally, Gary and Michael both work for an engineering firm. Although their roles are different, they’re in the same pay band with only €1000 to separate their annual income each year.

On paper, these two men are incredibly similar and it might seem fair to assume they would benefit from the same financial advice. In fact, taking an ‘off the shelf’ approach to their financial planning would be foolish.

Let’s look a bit deeper.

Gary and his wife, Aileen, are tired of living in the city and would like to make a move to the countryside before their oldest child starts secondary school. Aileen has elderly parents and her mother’s dementia is gradually worsening; she may not be able to live at home for much longer. Gary’s parents died when Gary was in his 20s. Gary and Aileen are both keen that their children have the opportunity to go to university without being saddled with debts, so they prioritise saving for their sons’ education.

Michael and his wife, Lucy, prioritise their family’s annual holiday and would like to take early retirement with a view to travelling as much as possible before they get too old. They’re happy to stay in the city but would love to move to a bigger house in the next five years as Lucy works from home (currently using the computer in the dining room) and would like more space for a home office. They have made some preliminary enquiries and there would be room to extend their current property. Michael is an only child, born quite late in his parents’ marriage, and his mum and dad are now in their early 80s. Lucy’s parents live nearby and quite often help with childcare.

It’s pretty safe to assume that Gary and Michael have different financial priorities. Gary, for example, may be looking for ways to maximise the equity in his house to fund the move to the country. He knows he can’t rely on a future inheritance and that Aileen’s parents may need to spend much of their personal savings on funding a place in a care home for Aileen’s mum.

Michael, on the other hand, knows that he and his children will be the sole heirs of his parents’ estate when the time comes. As the children are settled at their school and there is a good secondary school nearby, Michael and Lucy have decided to prioritise adding an extension to their house. They are also keen to maximise their short-term holiday savings and long-term retirement planning.

It’s the details of a person’s life and goals that have the biggest impact on their financial planning. What Gary and Michael show us is that even two people who share a lot of common ground need tailored financial advice to make the most of their income and assets, and to help them achieve what matters most to them in life.

For bespoke and independent financial advice that takes into account who you are as a person and what you want your money to help you achieve, call us on 045 888 904 or email info@moneyadviser.ie.

 
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Negative equity is when the current value of your home is less than the amount outstanding on your mortgage. In other words, you would owe your bank or building society more money than you’d get for the sale of your property.

Imagine you bought a house for €500,000 before the property slump and it is now worth just €250,000. If you were to sell your property at its current value, the bank would come after you for the €250,000 shortfall.

The downturn in house prices has hit many people hard but those most affected are people who bought their house at the top of the market with a high loan-to-value mortgage, e.g. 90%.

How do you know if you’re in negative equity?

Negative equity tends to be an issue that simmers away in the back of our minds until we come to the point of wanting to sell up and move.

To find out whether your property is in negative equity, you might want to consider asking two or three local estate agents to provide you with a valuation (most will do this free of charge). You can also look at what comparable properties in your area have sold for recently; there’s a wealth of information online.

Tackling negative equity

The only way to correct the shortfall of negative equity is to reduce your mortgage to the value of your house, which may sound easier said than done.

If you are someone whose property is in negative equity, you do have options.

Option 1: Increase your mortgage payments

If your house is in negative equity and you are comfortably able to meet your monthly mortgage repayments, you may want to consider increasing them. You will need to check the terms and conditions of your mortgage to see if this is possible. Increasing your repayments slightly can take years off your mortgage, closing the gap between what you owe and the value of your property.

Option 2: Make occasional overpayments

If you receive an annual bonus, you might want to consider making a one-off overpayment on your mortgage instead of spending it on a family holiday or a new piece of tech. You will see the benefits long-term.

Option 3: Letting your property

If you have to move for work or other circumstances but are in negative equity, you may want to consider letting out your property so that you can meet your mortgage repayments and hold off selling until a time when house prices are more buoyant. Negative equity currently plays a major role in the number of people becoming ‘accidental landlords’.

You do need to be aware of the costs associated with letting your property. This will include your tax bill, Private Residential Tenancies Board (PRTB) registration costs, refurbishment and upkeep, insurance, and damage caused by tenants are all things to consider.

Option 4: Renegotiate

If your fixed term mortgage is due to end, it’s worth trying to negotiate a new deal with your mortgage lender instead of languishing on the standard variable rate (SVR). You may find that the SVR is non-negotiable but you could try fixing a percentage of your mortgage and accepting the SVR on the rest. This way you are hedging your potential exposure to rising interest rates.

Option 5: Negative equity mortgages

There are currently a few mortgage providers who offer negative equity mortgages such as permanent tsb and Bank of Ireland. These mortgages let you move house and take the money you owe on your old mortgage with you. This can be a costly option but it may give you the freedom to move as soon as possible. It’s worth doing your homework or seeking independent financial advice about whether this would be the right choice for you.

Prioritise your mortgage payments

Being in negative equity can fill like a millstone around your neck but prioritising your mortgage payments will make a huge difference to your long-term options. While you are doing this, house prices are taking an upturn. Eventually, the increasing value of the house and the reduced mortgage outstanding will meet in the middle and you’ll be able to put up that For Sale sign.

If your property is in negative equity and you aren’t sure of your best course of action, call us on 045 888 904 or email info@moneyadviser.ie to schedule an initial consultation.

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It’s significant that the media and politicians have chosen to frame the loan of €85billion as a ‘bailout’. In my mind, a bailout is when someone gives you a non-repayable cheque to cover the deposit on a house or pay off your credit card bills. To me, a bailout suggests a clean slate.

In reality, the financial support given to Ireland in 2010 came with a whole host of terms and conditions, not least that the money be repaid with interest, albeit a fixed rate. The period of austerity that enabled us to pay back our initial three-year loan on time must continue if we are going to pay back what we owe. It’s a crock to call this arrangement a bailout.

What this illustrates perfectly is that the titles we give things, especially our finances, have a massive impact on how we feel about them. It’s certainly much easier to be positive about a bailout than it is a loan.

Giving our money incorrect titles can lead us down a dangerous path. It’s all to do with how we ‘frame’ our finances.

What is the Framing Effect?

The Framing Effect is a well-known psychological term. It describes the way in which people react differently to a particular choice depending on whether it is presented as a loss or a gain. Research suggests that we are all loss averse and will tend to avoid loss more than we want the equivalent gain. We become more susceptible to the Framing Effect as we grow older.

In a famous study from Stanford University in 1981, academics Amos Tversky and Daniel Kahneman presented 152 students with a hypothetical life and death situation. They were told that 600 people had been affected by a deadly disease for which there were two alternative solutions.

Option A would save 200 people’s lives. Option B had a third of a chance of saving all 600 people and two-thirds of a chance of saving no-one.

72% of participants chose option A.

The same scenario was offered to another group of 155 students but this time it was worded differently. In this scenario, if option C was taken then 400 people would die. If option D was taken, then there was a third of a chance that no-one would die but a two-thirds probability that everyone would die. In this group, 78% of participants chose option D (which is the same as option B).

What the study demonstrated was that treatment A was chosen when it was presented with positive framing, i.e. ‘saves 200 lives’ but the same treatment was rejected when it was presented with negative framing, i.e. ‘400 people will die’.

Politicians regularly use the Framing Effect. The government will talk about rises in the employment rate (which people will typically support), while the opposition will take great pains to emphasise the associated unemployment rates under the governing party.

Advertisers and marketers are fond of the framing effect too. For example, a product might be promoted as having a 95% success rate rather than a 5% failure rate, or 80% fat-free rather than containing 20% fat.

Framing your money

What does this have to do with your money? Let’s imagine that two people from similar backgrounds with similar circumstances each have some savings. The first person calls this pot of money their ‘retirement fund’, whereas the second person refers to the same amount as their ‘slush fund’, an all-encompassing account for retirement saving, children’s education, rainy day money and holidays. Which fund is likely to be dipped into first?

Lots of us haven’t figured out how our assets should be divvied up but if we mix our slush fund with our pension fund, the latter becomes contaminated and more easily frittered away.

One of the most significant steps you can take with your personal finances is to understand where your assets should be allocated and what percentage is allocated where.

Mental accounting

‘The behavioural life cycle hypothesis’ (Shefrin & Thaler, 1988) suggests that we each mentally frame our assets as either belonging to our current income, current wealth or future income. The ‘pots’ we mentally allocate our money to have a massive impact on how likely we are to dip into them.

According to research and anecdotal evidence, people tend to mentally separate their money into separate buckets, e.g. money for food, entertainment, car expenses, etc.

In a famous anecdote about mental accounting, a couple receives a $300 compensation for a lost food delivery. Do they spend the money on replacing the lost food? No; as they’ve already done that, they decide to splurge on an expensive meal.

The theory goes that we are more likely to splash out on something if it falls within the same ‘bucket’ or category as the money we’ve received.

Mental accounting is subject to many inconsistencies to do with how we perceive and frame different situations. For example, people behave very differently when they are using credit cards instead of cash. Research suggests people are likely to place much larger bets if they’re paying by credit cards, simply because money hasn’t physically changed hands.

Set your boundaries

What framing and mental accounting teach us is that successfully managing your finances is all about boundaries.

1. Be careful how you label your money (a loan is a loan, not a bailout!)
2. Slow down your decision-making process so that you can move beyond your initial emotional response – do this by trying to reframe the options in front of you
3. Get a second opinion – two heads are better than one and independent financial advice can help you see your financial situation in a more objective light

To discuss how you can protect your assets and divvy them up to best meet your financial objectives, call us on 045 888 904 or email info@moneyadviser.ie.

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KBC Bank Ireland has been running for more than 40 years and is a subsidiary of KBC Bank NV, one of Europe’s biggest banks. Historically, the bank has offered deposit accounts and mortgages.

The launch of the current account last September, as well as a credit card and a broader insurance product range subsequently, has been heralded as a move ‘designed to give greater choices to customers in the Irish market’.

But will this drive for an increased market share really make a difference to customers?

Ultimately, I would argue that KBC is just another bank offering the same restrictive products to its customers. The financial services industry works on a transaction basis; the bank makes an appointment for you to speak to their ‘adviser’ for free and you invariably come away have signed up to a new product or service, almost as though you’re obliged to buy something because of that free advice. Transaction-based ‘advice’ has the bank’s interests at heart, never yours. Remember, if it looks like a duck…

The reality is that people will never get independent financial advice from a bank – it’s like trying to fit a square peg in a round hole, it can’t be done. KBC may be offering different choices to customers in the Irish market, but only choices that will increase its bottom line, rarely choices that are objective and the best fit for the customer’s individual circumstances.

Yes, the KBC current account offers full online and mobile banking capability but in the age of smart phone technology, isn’t that what we’ve come to expect as a minimum; it’s hardly revolutionary! Like most other current accounts, customers can expect to pay fees on cheques, quarterly account fees and account maintenance fees, as well as a charge for ATM withdrawals. ATM withdrawals and cheque processing are only free if you hold a daily balance of €2000 or more in your account each quarter.

While I believe competition is a good thing, ultimately, I can’t see that KBC’s steps to become a full retail bank will make any real difference to customers in terms of choice, variety or products that are customer-focused. It’s just more of the same. The only way to change this is for customers to become more vocal about what they want.

I strongly believe that the role of banks should purely be to facilitate the lodging and withdrawal of money. No more, no less. As soon as a bank has a vested interest in the financial products used by customers, objectivity goes out the window, which means we may not get to hear about the financial solutions that would be best for us.

For objective financial advice that takes into account who you are as a person and what you want your money to help you achieve, call us on 045 888 904 or email info@moneyadviser.ie.

PS: If you are one of the 5,650 to take a redundancy package from AIB, Bank of Ireland, permanent tsb, Ulster Bank or Danske Bank and would like a real opportunity to demonstrate your skill, talk to us. Email your CV to me in confidence – bob@moneyadviser.ie
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Knowing your financial priorities

Although I believe that everyone should have a plan for their financial future, a big part of that plan is about getting your financial priorities straight. Retirement planning isn’t the only investment that needs your attention, especially when you’re starting out.

We may think of life as short but, realistically, more and more of us are living into our late 70s, 80s and beyond. As well as planning for our retirements, we need to consider big financial milestones such as buying a house, having children and paying for our children’s education.

Why your pension may need to take a back seat

Should you be paying into a pension in your 20s if your immediate priority is to buy a house? After all, you will need to raise the money for the deposit, stamp duty, etc. It might be wiser to put your efforts into achieving this.

Owning your own home can be a significant long-term investment, both in terms of equity and as a source of stability. Also, the earlier you buy your own home, the more likely it is that you’ll be mortgage free before retirement age.

Consider too that if you are in your 20s or early 30s and have €5,000 on a credit card, does it make sense to be paying into a pension while you’re bleeding money in monthly interest on your credit card? It’s comparable to pouring water into a bucket with holes – it’s never going to fill up. Clearing expensive debts once and for all should always be your financial priority, if you haven’t managed to avoid them in the first place.

Making the most of your money

One thing you can do in your 20s and early 30s is to consider the pension contribution your employer will make. Although there are lots of different factors to think about when applying for a job, it makes sense to work for a company that offers robust benefits if you can. Depending on your employer’s pension contribution, you may be able to begin building a decent nest egg at little direct cost to you, while still focusing on your more immediate priorities.

Identify your long- and short-term goals

As discussed in our recent blog – DIRT increases – Is it time to invest in the long haul? –, it is also important to think about whether you are investing any money you can save in the right places. By working out your financial priorities and goals, you can ensure that you make the most of your investible assets as your income grows through your 20s onwards.

You might want to consider different investments and savings options based on a variety of long- and short-term financial goals. By separating your investible assets into clearly-named ‘pots’ (more on this in next week’s blog), you can earmark your money for retirement, education, holidays, family days out and much more.

As our 20s and 30s tend to be a time of high outgoings, it may not be possible for you to save for every financial eventuality, which is why you need to prioritise. It might be worth seeking independent advice about which route would best lead you to realising your financial goals.

The question is, are you making the right financial decisions based on where you are in life and what you want? If you’re not, then what can you change?

To discuss the best route to achieving your financial priorities, call us on 045 888 904 or email info@moneyadviser.ie.

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In case you’re not sure what DIRT is, it’s a form of tax on interest earned on savings accounts in Ireland and is deducted at the source. For every €100 of interest you earn, you pay a whopping €41 to the state. This means that if you were to hold €50,000 in a deposit account at 3% interest, you would see a return of €885, and the rest – €615 – would go to the government. DIRT deductions have almost doubled from 21% since 2008 and deposit rates have diminished considerably.

Without doubt, the DIRT increases emphasise the point that savings accounts are never the place to put your money for the long-term.

Identifying your options

The first step in investing in more productive assets is to work out whether you’re a long-term investor or short-term saver. For example, if you’re 40 years old and have €150,000, you’d be well advised to take your money out of a deposit account and explore your long-term investment options. Otherwise, your savings will be eroded in the long-term through inflation.

If you’re 25-years-old and are saving for next year’s holiday, then a deposit account may be a viable option. It all depends on your short- and long-term financial objectives.

Identifying your investment options can feel like a major stumbling block. You may not know who to trust or where to turn for sound advice. After all, how can you tell who’s impartial or who has the necessary expertise? Perhaps you’re worried about falling foul of the ‘exit tax’ for leaving an investment fund or life assurance policy? Maybe you’re concerned about the risks of long-term investment strategies, having always believed that deposit accounts are the ‘safest’ bet?

Seeking independent advice

Independent financial advice is a must for savvy savers keen to invest in more productive assets. Why? Banks, building societies  and other financial institutions have a vested interest in selling us their products, which means that their advice is rarely, if ever, impartial.

An independent financial planner, on the other hand, has nothing to gain from recommending one option over another. They are more likely to take a holistic approach to your finances and give you a bespoke breakdown of your options so that your long-term savings aren’t tied up in inefficient deposit accounts.

Whatever your situation, the DIRT increases are here to stay as part of Ireland’s post-bailout cost of living. It pays to make yourself fully aware of your long-term investment options.

For expert, impartial advice about long-term investment strategies, call us on 045 888 904 or email info@moneyadviser.ie

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Looking forward

On 15^th December 2013, Ireland was the first country to exit the IMF international bailout programme. Enda Kenny’s government must now assume full responsibility for continuing to restore Ireland’s economic fortunes. Although we can expect further austerity ahead, it’s safe to say that Ireland, and indeed the world, has changed over the past three years. In exiting the programme, the Government is looking forward.

Perhaps it’s time for the rest of us to do the same, to draw a line in the sand and take control of our finances.

Managing your assets

When was the last time you reviewed your investible assets? Are you confident that your money is working as hard as it can for you?

Turning a new leaf on your personal finances begins with identifying your short-, medium- and long-term priorities. This may depend on your stage in life, whether or not you own property, whether you have children or how you would like to spend your retirement.

Planning for life’s big events

Retirement planning is a good place to start. One of my clients recently told me that he hasn’t contributed to a pension in more than four years. He’s not alone. There always seems to be demands on our money in the here and now, more immediate priorities, as well as an uncertainty about where it’s best to invest. But as I told my client, retirement creeps up on us quicker than we expect and is a long-term priority we all need to have, especially from our 30s onwards.

It’s never too early to think about what you should be doing with your investible assets. As well as retirement planning, do you have a sufficient rainy day fund? Will you have enough money to pay for your children’s education?

Retirement, university education, house and car repairs, redundancy, or unexpected illness can all place a massive strain on our finances. It’s essential to have a plan to better understand the investments you need to make and the money you need to save to overcome these hurdles without taking an unnecessary financial hit.

Seeking financial advice

An independent financial planner can help you identify your short-, medium- and long-term financial goals based on your priorities. One of the benefits of seeking independent advice is that it gives you options for your investible assets that you may not have heard about or considered.

Our top tips for turning over a new leaf on your personal finances

1.       Take stock of your finances

The first step is to take stock of your financial situation. This means looking at your sources of income – employment, properties, savings, inheritance, etc. – as well as your current and future potential outgoings.

It is helpful to think about the following:

• How long do you have until you retire?
• When will your children finish school?
• How would you like to spend your retirement?
• How much do you need to save?
• What investible assets do you have?
• How are they currently invested?
• Are they working as hard for you as they could?

2.       Avoid unnecessary debt

In these austere times, debt may be weighing you down. Having a rainy day fund (aim for three months’ worth of outgoings) can help you avoid going into debt in the first place. Always try to pay your credit cards off in full each month and, if you do have debt, consider paying more than the monthly minimum to reduce the amount of interest you have to repay, as this will cut your repayments in the long-term.

3.       Recognise what type of investor you are

Some people are more risk adverse than others, so it pays to be honest about your risk tolerance, as this will affect which options you consider most suitable for your investible assets. Talking through your feelings about risk with a financial planner can be helpful and they can guide you on investments that suit your needs.

For expert, impartial advice about your personal finances and to create a plan that divides your investible assets according to your short-, medium- and long-term priorities, call us on 045 888 904 or email info@moneyadviser.ie .
 
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Three major issues affecting the industry right now – quality, risk and regulation – can all be neatly summed up by three letters at the centre of this scandal – RSA.

RSA Insurance Ireland – the country’s largest and fastest growing non-life insurer – operates a subsidiary providing ‘cheap’ home and motor insurance, and has just recently struck a deal with the Bank of Ireland to start offering its products directly to bank customers.

It was understandably big news then when, on Friday 8^th November, the RSA Insurance Group announced it was suspending three senior executives, including Chief Executive of RSA Insurance Ireland, Philip Smith, due to ‘issues in the Irish claims and finance functions’.

By Monday 11^th November shares in the RSA Insurance Group had taken a 17% nosedive and the problems, which are believed to have been caused by under-provision for large claims, are likely to cut this year’s operating profit by £70 million. For policy holders, this means that premiums are set to increase.

Another dent in public confidence

The irony – for a company that is in the business of managing risk, this scandal is a major hit to its credibility and another dent in public confidence and trust in the financial services sector.

In a recent blog article, I touched on the difficulties some of us experience working from inside the belly of the beast. There are so many financial companies and advisers who use a hard-sell and high fee structures to promote products and services for which they’re paid commission. Honest, hard-working people too often fall prey to less-than-transparent methods and charges, and hidden agendas.

Are you wary of financial advice?

If you have fallen foul of the pitfalls inherent in these services, you may feel wary of seeking genuinely independent financial advice (read this article to find out more about who can give financial advice). Adopting a ‘once bitten, twice shy’ philosophy, you perhaps prefer to grope in the dark for financial solutions, deciding to go it alone rather than trust financial advice you have to pay for without being sold a product at the end.

But let’s look at this from another angle. Can financial advice truly be impartial and bespoke to your individual circumstances if it is attached to the promotion of specific products and services?

If it sounds too good to be true, it probably is

What this latest scandal tells us is that if a financial product sounds too good to be true, then it probably is. Cheap doesn’t always mean cheerful and what looks like a great deal on the surface can be fraught with hidden risks, not least because it’s unsustainable in the long-term.

With RSA offering ‘cheap’ policies, coupled with the activities of recent weeks, those of us within the financial services industry need to think more about corporate governance – the systems by which corporations are directed and controlled.

You have a right to demand more from those advising you

In turn, clients need to become more engaged with dealing with reputable firms who can advise them on financial matters from an objective, independent standpoint. You have every right to demand more from those advising you. By more, we mean higher quality, lower risk and tighter regulation.

In turn, those advising you must place greater demands on the companies offering financial products. We need to make these companies accountable and know that everything possible is being done to protect clients and stay inside the law. We need companies to meet their rights and responsibilities, and to pursue their objectives with minimal risk to customers.

At The Money Advisers, we bring corporate governance and due diligence issues to the fore of everything we do. We value our independence because it means we can honestly and openly assess your finances and give the most appropriate advice without compromise or conflicting objectives.

Call us on 045 888 904 or email info@moneyadviser.ie to find out more.

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There is an enduring idea that the ultimate get-rich strategy lies in property investment. It’s easy to see why. There’s emotional reassurance in being able to see and walk around your investment. As you rip out old décor and transform a house into bright, modern surroundings you must be growing your equity, right? Not necessarily. In a recent blog article, I looked at four reasons why you shouldn’t be buying a property right now.

I always caution against making emotional financial investments because they may not always be sound. Your financial decisions should be based on cold, hard facts.

Unfortunately, many people struggle to see an alternative. The harsh reality is that too many of us know someone who has been stung by poor financial advice or dishonest, disreputable companies mis-selling products to turn a fast profit. There is understandably nothing more terrifying that the prospect of losing the savings and assets you have worked so hard to build. It’s a fear that cuts straight through to an emotional response.

So, where can you turn? Do you know who you would trust with your finances?

In seeking to minimise the perceived risks of understanding your investment options, your first port of call may be your bank. After all, you’ve probably had a long relationship with yours and feel reassured that your bank won’t charge you for advice that you may or may not choose to action.

It’s worth a word of caution here. Banks are in the business of making money and they do that primarily by selling their financial products. They have a vested interest in you investing with them. Will they be as supportive if you need help managing your cash flow or understanding your existing arrangements?

This is not to disparage banks but just to highlight that a bank may not be the most appropriate avenue for independent financial advice.

Perhaps you’ve considered seeking the advice of a local broker? Again though, they are in the business of selling financial products. Brokers make their money from commission and collecting fees from investors. While they may not charge up front for advice, the costs of this route can soon add up.

Seeking independent financial advice

Thanks to stories you’ve heard about disreputable advisers taking friends and family for a ride, you may find it hard to trust a financial adviser. In reality though, independent financial advice from a reputable and ethically-run independent financial advisory company is usually the most cost effective way to plan to protect your investable assets.

Because companies such as mine are independent, we are not focused on selling specific products. There is no agenda and no hidden fees. Instead, the focus is on providing bespoke and appropriate advice based on your individual circumstances. Of course, there is a price for this advice but it’s transparent and value-focused.

Take the emotions out of your finances

Yes, money is emotional. You work hard and you are emotionally invested in your future. Money can buy us peace of mind, security, freedom and choices. Anyone who has lived without an abundance of money knows how emotionally draining its absence can be.

Trusting your finances to someone else’s advice and guidance can feel like a leap of faith, but it doesn’t have to be.

Choose a company that adheres to a code of practice, who offers qualified and experienced financial advisers and has a strong rapport with existing customers.

Decision-making about your investable assets should never be emotional. It should be based on knowledge, practical, no-nonsense advice, trust, and free of a hidden agenda.

Call us in Naas on 045 888 904 or email info@moneyadviser.ie. 

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As grants and funding sources continue to be cut, third sector organisations will be increasingly dependent on donations to survive.

Michael Noonan’s decision in the 2014 Budget to retain the current 41% rate of tax relief on charitable donations provides us with a financial incentive to give to charity. I believe there are strong societal incentives too.

Teach a man to fish and you feed him for a lifetime

Charitable donations can be a significant force for change and development in society. There’s a Chinese proverb that says: Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.

By choosing to donate to a charity that supports people in gaining essential life skills and experience, it is possible for us to all build a society in which people are less dependent on government hand-outs and short-term assistance.

The more people are able to do for themselves, the more able they are to help and empower others to live without being dependent on someone else, financially or practically.

Less interference and more encouragement

For people in hardship, government support provides an essential lifeline. At the same time, perhaps we might fare better collectively if we put demands on the government to do less, to step back from the hand-outs that offer short-term solutions, to interfere less and exercise less control.

The money saved could be invested in empowering people, in building essential life skills or creating a wider breadth of opportunities to help individuals realise their full potential and independence.

There are some tremendous charities that work tirelessly to uphold the long-term belief that you should ‘teach a man to fish’ – in other words, support, educate and equip people – for the betterment of society as a whole. But charities need support too. Charitable giving of our money, time, resources, knowledge or advocacy can collectively help these charities achieve real change.

This month, I intend to put my money where my mouth is and donate €100 to Women’s Aid, an organisation that does a lot for women who are in abusive relationships. It is the very essence of teaching a man (or woman, for that matter) to fish.

From November 25^th to 10^th December 2013, Women’s Aid will be running its annual ‘One in Five Women’ 16-day campaign, which brings together over 100 community organisations to show solidarity for the one in five women who are affected by domestic violence and make this issue more visible in our society.

To find out more about charitable giving, whether you’re employed, self-employed or considering a corporate donation, phone 045 888 904 or email info@moneyadviser.ie and we can explain your options.
photo credit: cproppe via photopin cc