Invest in pensions, not real estate. Change utility provider. Don’t aim for the next big thing. Donal O’Donoghue talks with financial planner and author Eoin McGee about money matters and the true measures of success.

Eoin McGee – ‘As Seen On TV’ as the covers of his books say – is one of the country’s best-known financial planners. The host of the RTÉ series, How to be good with moneyas 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 grow your moneymarks a turning point compared to its beginnings, How to be good with money. While the latter was about the inner workings of financial matters – tips, advice, recommendations – the former is more holistic in its thrust, teasing why we do the things we do with our money.

How to grow your money is as much about life planning as it is money management, a reflection of the reality that money surrounds almost everything we do. But that’s not the end of everything either. Or as the title of the book’s epilogue says, “Remember, money isn’t everything.

These pages are informed with some emotion 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, prompted by the imperative to ensure that his wife would be OK financially.

All of those financial documents — listing successes, failures, diligence, and sacrifices — came down to a single page.

“I hope after reading this book you understand why you interact with money the way you do,” he says. “Like what did you learn from your parents? And if you have kids, what do you teach them about money? I don’t think long-term change happens without understanding the reasons and the logic of our relationship with money.

So it’s about spotting the little things that are so obviously obvious that when we look at them, we can understand why we’re doing certain things. You can 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 a habit. The best way to have money to make you happy is to spend it on experiences.”

Confinement lessons
Before we get caught up in the whirlwind of being back in the world, we have to ask ourselves what did I miss most when times were toughest? What are the things that have really added value to my life during the lockdowns?

A few years ago people might have said “I can’t start my day without a coffee from this barista”. Then this person brought an espresso machine and everything was fine at home. It could be a reverse analogy, but the point is, there were some things you didn’t miss, so don’t let them come back into your life.

Sometimes we walk into a store with the intention of buying a bottle of coke and we walk out with coke and chips. I’ve been accused of being a 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 this difference is essential to mastering your money management and your relationship with money.

The 72 hour rule
The purchase rule I follow is the 72 hour rule. Whether you buy online or in a physical store, put it back and 72 hours later, if you still want it, it was probably something that was going to add value to your life, so go buy. But after 72 hours if you forgot it, you have your answer.

So many people have contacted me to tell me that the 72 hour rule was revolutionary for them, and the amount of unnecessary expense they were avoiding by applying this rule. Obviously you can’t do that with milk or such things, but that applies to any purchase that isn’t an absolute necessity.

Get financially fit
When you train for a marathon, you don’t go out tomorrow morning and try to run the distance without any training. You do a little and build 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 well on a regular basis have a huge impact in the long run.

The first time you sit down to tackle a utility bill or anything, make sure the task doesn’t take you more than 15 minutes because if it takes you an hour and a half, you won’t be not encouraged to do it again next week. It’s better to do 15 minutes once a week for four weeks than a full hour the first time. Small changes done well and done regularly can have a huge impact in the long run.

Change utility provider
Here is a simple solution that you can do right now. Find your gas or electricity bill and connect to the Internet. Start with cru.ie which is a government agency that will give you a list of all change companies. On average, people will save $300 if they change one and nearly $500 if they change both. That’s a lot of money.

If you get two bills and you’ve been with your supplier for more than 12 months, it shouldn’t take you more than 15 minutes. Stop then. The problem is that people try to fix it all at once rather than thinking that financial planning is for the rest of your life.

Control your expenses
1. Every time you spend something, pull out your phone and save it. For example, it can be a cup of coffee or a chocolate bar or whatever. Every time you spend money, write it down in the Notepad app. Then, a week later, take a sheet of paper and divide it into two columns, one labeled “value added” and the other “did not add value”. Then you decide what would or wouldn’t be on the list for the next week if you consciously planned it. People will be shocked by what they learn.

2. I’m not a big fan of the word “budget”. I prefer spending rules. The spending rules relate to the amount of money I have in my bank account today and give a use to every dollar in that account by the next payday. A job could be savings. A job could be grocery shopping. A job could be dinner with your partner. Give every dollar a job and once you’ve done that, you now control your money and your money no longer controls you.

Money Myths
Warren Buffet, one of the richest men in the world, once wondered why people don’t just copy what he did to make a fortune. He replied that no one wants to get rich slow anymore. We now live in a fast-paced world of social media, where most people are looking for the next big thing. Statistics tell us that we need to invest in 22 “next big things” to make it a good one.

In my private practice, the way we handle your money is slow, boring, and unsexy. Life is meant to be all of these things; your investments are not. We know what is going to happen, we know there will be big surprises every few years so let’s get rich slow. Most financial myths are intertwined with this principle. Is Cryptocurrency the Next Big Thing? I have no idea. People should enjoy life and not run after big things.

FIRE – Financial Independence Early Retirement
We had a couple on this year’s TV show who are 25 and planning to retire at 45. When we tell clients we want to get them to financial independence as soon as possible and they say they don’t want to stop working, telling us the thing to understand is that achieving financial independence doesn’t mean you have to give up work, it just means that beyond that point you work because you have to, not because you need to. And that’s a huge mental shift.

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

Property against pensions
People who have money they want to invest will turn to real estate because it’s tangible: something they can see and touch. The problem is that you’re all in this property and so if you need the cash, you don’t have the cash. With pensions, you get €4 back for every €10 you invest in them, in the sense that you pay €4 less in taxes.

Now if I told you that you could go to the bookmakers and deposit €6 and get back €10, you would be at that bookmaker every Saturday morning. So if you want to pay less tax, put your money in a pension.

That line “I don’t like pensions because my friend burned himself on it and I wouldn’t touch it because they lost all their money” is like saying “I don’t like food because my friend had food poisoning and I “I don’t feel like eating anymore. There are no bad pensions, just bad advice.

Money is not everything
If lockdown hasn’t taught us that money isn’t everything, nothing will. Of course, life is very hard without her, but that’s not all. And money does not determine happiness. I was recently asked for my definition of success and it is “having the time to do the things you want and having the money to help you do them”. It’s having that time and being able to afford it.

How to grow your money by Eoin McGee is published by Gill Books.