A third of us can’t afford to save, and a sixth rack up debt
ALMOST a third of us are unable to save money at all, while one in six is racking up cash penalties on credit cards, according to a new survey that shows confidence has dipped.
The high cost of living and job loss warnings have only ‘eased’ rather than being no longer a worry, according to the latest Credit Union Consumer Sentiment Survey.
The February fall in sentiment reverses about a third of January’s gains as the hope of a drop in inflation appears unlikely to be enough to spark widespread confidence.
The survey of 1,000 people shows that they think the difficulties they have faced in recent years are easing but there is little sign they are anywhere near over.
Fears of tech job cutback and domestic redundancies have prompted nervousness about job security. Health insurance and fuel price rises and a delay in interest-rate cuts are keeping the pressure on households. Irish energy prices are up almost 60% over the past three years and will continue to be a major issue for most households.
The slight drop in confidence is shown in the research which came in at 70.2, a four-point drop from the January reading, which had posted an 11.2point monthly gain, the largest increase in three years.
Report author economist Austin Hughes said the road from a ‘feel-bad’ to a tentative ‘feel-good’ could be long and bumpy given the large run-up in prices households have endured in recent years, as well as the threatening geopolitical landscape and unclear economic outlook.
The survey revealed a heavy reliance on credit cards with around one in six people incurring extra costs through minimum or late payments, over-the-limit spending and cash advances.
Around two in three people pay their credit card bills in full each month.
Irish League of Credit Unions chief executive David Malone said the pull-back in consumer confidence in February is an unsurprising partial correction following an unusually large improvement in January.
He said the fact the drop in sentiment unwound only about a third of January’s gains suggests consumers sense some lessening of their recent difficulties.
While ‘headwinds’ may be easing, there is still little sense of emerging ‘tailwinds’ that would prompt a surge in sentiment, he said.
There were warnings of further rounds of global cutbacks to come from a range of multinationals with significant staff in Ireland, including Google, Microsoft, Paypal, eBay and TikTok.
There were also media reports of prospective job cuts at high-profile domestic companies including Glen Dimplex, Kerry Group, Mediahuis and Three Ireland along with cafe and restaurant closures, adding to job security fears.
A quarter of savers are putting money away for home improvements, 13% are saving for education and 11% for first-time home-buying. The survey found 34% save regularly while 27% save occasionally and 32% of consumers say they are unable to save at all.
Savings capacity tends to be at its lowest among those aged between 45 and 54 and higher at either end of the adult age spectrum.
‘Rainy day’ funds are the most common reason for saving, with funding a holiday the second-most common reason, and people are more likely to save for a long-term nest egg than for retirement.
Just under half of savers (46%) do it for security against financial emergencies.
‘Pullback not surprising’