Last week I wrote about families earning a good salary but having no money. Well, this morning, The Irish Times published an article on how much it costs to run a household in Ireland. For a family of four, it costs up to €45,000 to run the household and pay the bills. If you bought your house during the boom years, you can add another €5,000 to that total.
A lot of the expenditure seems to be taken from the guidelines issued the Insolvency Service of Ireland. These guidelines are for people who are insolvent and trying to do a deal with their creditors. If you are not in that situation, it is likely that you will be spending more.
The average given does not include going on holidays. You are working hard to earn a good income, you need to have some time off to spend with the kids and recharge the batteries. A two week holiday for 2 adults and 2 kids in France or Spain is going to set you back €4,000 and that’s before spending money. If you want to have weekend trips and maybe another trip away when the kids are off school, you can add another few thousand to it.
It’s no wonder that you are spending all that you are earning. Life is getting in the way of accumulating assets! The starting point to get a grip of your finances is to draw up a household budget and then open up a household bank account. The household budget is to include the monthly savings that you want to make (this is then going to a regular savings plan from your household account). When you have averaged out the costs, add 10% for contingencies. By putting a fixed amount into your household account each month, it doesn’t matter if a bill is being paid the day before payday, you know the money is there. What is left in your own current account is yours to spend.
What way do you manage your money? If you have any questions, drop me an email at steven@bluewaterfp.ie