Invest in pensions not property. Switch utility providers. Do not aim for the next big thing. Donal O'Donoghue talks to financial planner and author Eoin McGee about money matters and the true measures of success.

Eoin McGee – ‘As Seen On TV’ as his book covers’ have it – is one of the country’s best known financial planners. The host of the RTÉ series, How To Be Good With Money, as well as the best-selling spin-off book of the same name, also runs his own company, Prosperous Financial.

His recently published second book, How To Make Your Money Work, marks a shift away from his debut, How To Be Good With Money. If the latter was about the nuts and bolts of financial matters – tips, advice, recommendations – the former is more holistic in its thrust, teasing out the reasons we do the things we do with our money.

How To Make Your Money Work is as much about life planning as financial management, a reflection of the reality that money twines around most everything we do. But it’s also not the be all and end all. Or as the title of the book’s epilogue has it: ‘Remember, Money Isn’t Everything.’

Those pages are informed with a certain poignancy as McGee’s father, Michael A (to whom he dedicates his book), died in December 2020. In his final days, he asked Eoin to review his finances, driven by the imperative of ensuring that his wife would be financially OK.

All those financial documents – listing success, failure, diligence and sacrifice – came down to a single page.

"Hopefully, after reading this book you will recognise why you interact with money in the way that you do," he says. "Like what did you learn from your parents? And if you have kids, what are you teaching them about money? I don’t think that long-term change happens without understanding the reasons and the rationale behind our relationship with money.

So this is about picking out the little things that are so blatantly obvious that when we look at them, we can understand why we do certain things. You might spend money on coffee every day and get a lot out of it, but there are others for whom buying coffee every day is just habit. The best way for money to make you happy is to spend it on experiences."

Lockdown lessons
Before we get caught up in the whirl of being back in the world, we need to ask ourselves what did I miss most when times were toughest? What was the stuff that really added value to my life during the lockdowns?

A few years back, people might have said ‘I can’t start my day without a coffee from that barista’. Then this person brought an espresso machine and all was fine working from home. Now that might be a flip analogy, but the point is that there were certain things you didn’t miss so don’t let them creep back into your life.

We sometimes walk into a shop planning to buy a bottle of coke and we walk out with coke and crisps. I get accused of being a penny pincher, but good financial planning is about not spending money on things that don’t add value to your life. It’s about having more money to spend on things that add value to your life. Understanding that difference is key to getting on top of managing your money and your relationship with money.

The 72-hour rule
The shopping rule I abide by is the 72 hour rule. Whether you are buying online or in a physical shop, stick it back and 72 hours later, if you still want it, then it was likely something that was going to add value to your life, so go and buy. But after 72 hours if you’ve forgotten about it then you have your answer.

So many people have contacted me to say that the 72 hour rule was ground-breaking for them, and the amount of unnecessary spending they avoided by applying that rule. Obviously, you can’t do it with milk or such things but it applies to any purchase that isn’t an absolute life necessity.

Getting financially fit
When you are training for a marathon, you don’t go out tomorrow morning and try to run the distance without any training. You do a little bit and build up the distance. When people decide to learn about their relationship with money, it’s about doing small things on a regular basis. Small things done right on a regular basis have huge long-term impact.

The first time you sit down to tackle a utility bill or whatever, make sure the task doesn’t take you more than 15 minutes, because if it takes you an hour and a half, you’ll not be encouraged to do it again the following week. You are much better off doing 15 minutes once a week for four weeks than a full hour the first time. Little changes done right and done regularly can have huge long-term impact.

Switching utility providers
Here’s a simple fix you can do right now. Find your gas or electricity bill and log onto the internet. Start with which is a government agency that will give you a list of all the switching companies. On average, people will save €300 if they switch one and closer to €500 if they switch both. That’s a lot of money.

If you get two bills and if you’ve been with your provider for more than 12 months, that should take you no more than 15 minutes. Stop then. The problem is that people try and fix everything in one go rather than thinking financial planning is for the rest of your life.

Take control of your spending
1. Every time you spend anything, take out your phone and make a record of it. For example, it might be a cup of coffee or a bar of chocolate or whatever. Every time you spend money, write it down in the notepad app. Then a week later, get a piece of paper and divide into two columns, one marked ‘added value’ and the other ‘didn’t add value’. Then you decide what would make the list or not for the following week if you were consciously planning it. People will be shocked by what they learn.

2. I’m not a big fan of the word ‘budget’. I prefer spending rules. Spending rules are about how much money do I have in my bank account today and giving a job to every single euro in that account between now and the next pay day. One job might be savings. One job might be groceries. One job might be dinner with your partner. Give every euro a job and once you’ve done that, you’re now controlling your money and your money’s not controlling you.

Myths about money
Warren Buffet, one of the world’s wealthiest men, was once asked why people don’t just copy what he did to make their fortune. He answered that nobody wants to get rich slowly any more. We live in a fast-moving, social media world now, where most people are looking for the next big thing. The statistics tell us that we have to invest in 22 ‘next big things’ to get one right.

In my private practice, the way we manage your money is slow, boring and not sexy. Life is supposed to be all those things; your investments aren’t. We know what will happen, we know there will be big surprises every few years so let’s get rich slow. Most of the financial myths intertwine with that principle. Is crypto currency the next big thing? I haven’t got a clue. People should enjoy life and not go chasing the big things.

FIRE – Financial Independence Retire Early
We had a couple on this year’s TV show, 25 years of age and planning to retire at 45. When we say to clients that we want to get them to financial independence ASAP and they say that they don’t want to stop working, we say that the thing to understand is that getting financial independence doesn’t mean you have to give up work, it just means that beyond that point, you’re working because you have to and not because you need to. And that’s a huge shift mentally.

Even if you love your job, you’re going to have bad days. With FIRE, you have that independence but the maths can be rigorous, with people working so hard to retire as early as possible.

Property v pensions
People who have money they want to invest will turn to property because it is tangible: something they can see and touch. The problem is that you’re all into that property and so if you need cash, you don’t have the liquidity. With pensions, you get €4 back on every €10 that you put into it, in that you pay €4 less in tax.

Now if I told you that you could go into the bookies and put €6 down and get €10 back, you’d be in that bookies every Saturday morning. So if you want to pay less tax, put your money into a pension.

That line ‘I don’t like pensions because my friend got burned on one and I wouldn’t touch them because they lost all their money’ is like saying ‘I don’t like food because my friend got food poisoning and I don’t want to eat any more.’ There is no such thing as bad pensions, just bad advice.

Money isn’t everything
If lockdown didn’t teach us that money isn’t everything, nothing will. Of course, life is very hard without it, but it’s not everything. And money does not determine happiness. I was asked recently for my definition of success and that is ‘having the time to do the things that you want and having the money to support you doing it.’ It’s having that time and being able to afford that time.

How To Make Your Money Work by Eoin McGee is published by Gill Books.