Getting your finances in order

It’s Operation Transformation time on RTÉ. That time of year when 5 overweight people try to shed the pounds and change their lives around with the help of experts. A very interesting part of the show is the physiological aspect of being fat. It is not just a matter of these leaders eating less. They are in a rut and need help to get out of it.

Trying to lose weight is difficult. You need a calorie deficit of 500 calories a day to lose 1 pound a week. To put that into context, a a regular Big Mac meal is 1,000 calories but an hour of cardio will burn 500 – 750 calories (depending on intensity). It is easy to undo all that hard work because you feel hungry and depressed about not having food that is high in sugar and salt content that makes it so tasty.

Just like losing weight, people can get in a rut with their finances. They can see no way out and so just continue with their bad habits, hoping it will go away at some stage. The problem is it doesn’t and the debt catches up on you as the interest rates can be crippling. It is very difficult to get into financial shape. We just get 12 pay cheques a year and we have lots of bills to pay for each month out of that before we even get to getting our finances in order.

Stop looking at what other people have

With social media, people only post the best bits of their lives to make us think they are living the perfect life. Why can’t I have a life like that and get new clothes, cars, holidays all the time like them? Because people don’t talk about money we don’t know what other people’s financial situations are like. We don’t know how much debt they are in or if they came into money. That person who always seems to have money might be spending every penny they earn and are paying for the shopping on their credit card at the end of the month.

What other people have is nothing to do with you. They won’t be paying your bills or deciding when you retire. That is your decision and only you can fix it.

Live within your means

If you can’t afford it, don’t get it. It is too easy to pay for something on the credit card and pay it off at some other time. If you don’t pay off your credit card in full, you get charged interest at 20%.

But first you need to know how much you have to spend. That is why a basic budget is needed. By that I mean how much does it cost to run the household and make sure all the bills are paid? Make sure you have that money put aside each month.

Do you want to go on holidays and how much will that cost? If you need to save for that over a year, put that money away each month too. Same for another other big purchases that you may have. You can then spend the rest on whatever you want.

Set targets

The leaders on Operation Transformation are set targets each week on how much weight they have to lose. They also have the added incentive that not only are they accountable to the experts, they have to go on TV and stand on the scales each week.

You need to set targets with your finances as well. As most of us are paid monthly, it’s difficult to set weekly targets but you need to write down what you are going to do and how you are going to achieve it.

there’s not much we can do week to week but you need to know what you have to do and how long it is going to take to do it. Your target for the first year may look something like this:

  1. Clear credit card debt of €2,000. Pay €500 a month into it and clear it in 4 months.
  2. Build up rainy day fund. Divert the €500 credit card money into a savings account for 8 months. Have €4,000 in cash at end of 2020.
  3. Start a pension plan in 12 months. Pay €300 a month into that to start and keep €200 into rainy day fund.
  4. When I get a payrise, I will divert that money into my pension and savings.

Being accountable to someone really helps too. It is too easy to stop doing the hard things if no one will give out to you about it. If you are a couple, you certainly need to do it together as it is a joint problem.

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