Family and finance: Ask an expert on how to make your money grow

Worrying over money and finance is something a lot of us do, causing stress, tension and often, unfortunately, arguments.

But the thing is – a little bit of financial planning can go a long way when it comes to getting control over your money and helping you save, budget and manage your finances better. We are continuing our series on personal finance with money expert Paul Merriman of askpaul.ie, and this week, Merriman is tackling a subject close to all of our wallets — how to increase your stash of cash. Here are Merriman's tips some very simple ways to ensure a brighter financial future for all the family:   Start young It’s never too early to start saving. Even a two-year-old knows how to ask his mother to buy sweets so children are aware of the power of money from a very young age. Studies show that children have formed their spending/saving habits by the age of seven — and you, the parents, are the main influence. So how can you help your children adopt a sensible approach to money? Pocket money helps teach little ones about budgeting and gives them a degree of responsibility for how they spend their “income." Introduce the idea of doing chores so they can “earn” their pocket money. Perhaps have a day and time by which the task(s) should be completed. It is important to remain consistent. Give each child two piggy banks — one for savings to buy something special like a sports jersey or computer game. Get them to work out what the cost of the item they are saving for is and how long it would take to save for it, based on how much pocket money they get. The other piggy bank is for more long term saving and can’t be touched until an agreed time in the future (going on holiday, for example). Opening their own bank account is the next step. Remember, by sharing financial lessons with our kids starting at all ages, we can help them understand the importance of being financially responsible and self-sufficient for life. Best ways to save Everyone needs a second bank account. Why? This will be your Acorn Account — where you will act like a little squirrel and take money from your main account and hide it. Set up a standing order or direct debit on the day you get paid to transfer a set amount from your wages directly into the Acorn Account. What you don’t see, you don’t spend — that’s why you need to move that money from your current account. Cutting discretionary spending is another simple way to top up your Acorn Account. Perhaps you buy a cup of coffee for €3 every working day (€780 per year) and pay €50 per month for a gym you hardly visit (€600 per year) and buy bottled water (€1.50 per day) instead of refilling a water bottle (almost €550 per year). You could be saving €1,930 every year just by cutting out those three luxuries. Investing made easy Leaving your money in a deposit account might be low risk, but you don’t need to commit to a high-risk investment to see your cash pile grow. Merriman explains: “People are afraid to talk to a financial advisor about putting money in an investment fund. They think stocks and shares are only for rich people or that it might lead to them losing all their money. The truth is, with the right advice and the right fund, you can see your money outperform the market and enjoy much greater returns on your initial investment than leaving it sitting in a bank earning zero interest." He explains that putting your Children’s Allowance of €140 a month into the right fund could see it add up to €48,888 over 18 years. Merriman reveals that you can start investing from as little as €75 a month and there are “easy access” funds that allow you to withdraw your cash if you need it. “A good financial advisor will explain the ups and downs of various funds with risk factors rated from 1 to 7, so it’s whatever you feel comfortable with. You can see huge returns of up to 10 per cent per year with a successfully managed porfolio such as the Zurich Performance Fund." Finding extra cash So you want to build up a nest egg but cannot find any extra money at the end of the month? Merriman is a big believer in switching providers and reckons it can save you a fortune. This includes utilities (gas, electricity), home insurance (if you took a policy through your bank with a mortgage, you are probably paying way over the odds so shop around when the renewal date looms) and always ring around (or ask a broker) before you renew any other insurance from travel to car to life. But one of the main ways to save thousands is to switch your mortgage (you are free to do so, as long as it’s not fixed). Talk to a broker and check out the best websites to compare deals. Other ways to get extra cash is having a house clear-out (even those old Playstation consoles can find a buyer on donedeal.ie or the local car boot sale), taking on extra work or a part-time job and monetising your favourite hobby (if you’re good at yoga, why not teach a class?) For more tips and information, check out www.askpaul.ie/financial-planning/ and get a free personal budget template and advice in easy to follow steps so you can create your own personal financial plan.