Friday, 31 May 2013

Launch of the First 2013 ‘What’s Left’ Tracker

This week, the Irish League of Credit Unions published the results of the first ‘What’s Left’ Tracker of 2013.  The series, which has been running since April 2011 now enters its third year.

This year, we have decided to put a new focus on the research and look in more detail at what exactly families and individuals across the country are spending their money on. We will also continue to monitor the hardships that ordinary people and their families are encountering on a daily basis and how their personal finances are being impacted. We will do this by looking at areas like - like utility / energy bill price increases, ability to save, private health insurance, cost of groceries, transport and much, much more.

Over the past two years, 2011 and 2012, we have seen a consistent decline in disposable incomes for the majority of the population, however with the May 2013 results we can begin to see what looks like a stabilisation for the first time. This may not mean that people are better off but are maybe are managing their finances more closely and cutting back on unnecessary spending.

Figures indicate that in all the lower income categories, the May 2013 figures show a decrease – for example, the numbers of people with no income left after all essential bills have been paid has dropped from 690,000 to 518,000. Those with €50 or less has dropped from 1,588 million in December 2012 to 1,208 million in May 2013. Those with €100 or less has dropped from 2.106 million in December 2012 to 1.7 million in May 2013.

While this is a very positive sign that the year ahead may bring some further positivity, it is hard to ignore that many of us are still meeting financial challenges on a daily basis and are seriously struggling to keep their heads above water.

For example - almost 4 in 10 adults (37%) have put off paying their essential bills, with 8 in 10 having to sacrifice spending in other areas to pay the bills. The primary reason for not paying their bills on time in full each month is an inability to pay – 33% stated that they cannot afford to pay all of their bills every month.

Not surprisingly non essential items like nights out and holidays are the most sacrificed in order to make a full or part bill payment however items such as clothes and footwear (71%), health insurance (39%), food (30%), second car (21%) also rank highly.

Interestingly, for the first time since April 2011, more people are stating that they are in a position to save. 4 in 10 adults are now putting something away at the end of the month. The average amount being saved is €170. This is less than what we have seen over the past two years but nonetheless it is encouraging to see that people may now be in a position to put something away each month, no matter how small.

Property tax is to the fore of everyone’s mind at the moment, particularly this week as the deadline for registration closed. This round of the tracker shows that of those homeowners who have received the property tax notice, 4 in 10 (41%) felt that valuation was higher than expected. Almost one fifth of homeowners (19%) are unlikely to pay the tax by the deadline. (on par with figures released by Revenue on Tuesday 28th May) Of those who won’t pay, 4 in 10 (41%) say they cannot afford to do so. 51% cannot afford to pay a lump sum up front with 32% of these stating that they will be paying in monthly instalments. 7 in 10 homeowners (69%) will have to forego spending on other items like for example Discretionary items, clothing, repaying credit card and personal loans and groceries, health insurance etc.

This is an indication of the difficulty people are experiencing when it comes to paying this tax and looking ahead to 2014 when the cost of the tax doubles, they amount of people struggling to pay this tax is likely to increase.

In keeping with the new 2013 theme, the ILCU have enlisted the help of three independent financial experts who will look at different personal finances issues throughout the year offering practical tips, advice and guidance through the Fix your Finances website – www.fixyourfinances.ie.

We will also hear from people all over the country who will let us know how their personal finances are being impacted each time the tracker is published. These videos / audio will also be available to view on the fix your finances website and I would urge you to take the opportunity to have a look if you can.

Over all we may now be beginning to see a shift towards the positive for many people this year as families and individuals stand more prepared for the continuing impact of years of austerity. We know that tough times are ahead for many and indeed many will continue to seriously struggle. It will be interesting to see how the research progresses over the remaining months of 2013.