Monday, 30 September 2013

Second ILCU What's Left Tracker of 2013

The Irish League of Credit Unions (ILCU) has today published the second ‘What’s Left’ tracker of 2013. In May 2013 we saw the first hint of disposable income stabilisation. We are happy to say that this trend has continued into the second part of the year. However, despite the first signs of positivity, many people and their families around the country are telling us that they continue to struggle to manage their household budgets on a daily basis.

The ‘What’s Left’ tracker, which was introduced in April 2011, aims to look at household finances and the challenges people all over the country are experiencing as the country moves through recession. In 2013, the project focuses more on the journey from net monthly income to disposable income by examining how a typical family is spending their money. We are also delighted that through our ‘Fix your Finances’ website we are able to hear the real life stories of how people are struggling with their

The Research Findings

Disposable income has increased by 6% from €163 in May 2013 to €172 in September 2013 for an average adult. Disposable income has increased by 9% from €188 in May 2013 to €205 in September 2013 for a working adult. Coming into the winter months when traditionally we see an increase in household utility bills, it will be interesting to see if this trend continues.

Those with €100 or less disposable income left, once all essential bills have been paid, has increased by 20,000. This may be a result however of people moving out of the lower disposable income categories. 1.18 million adults now have €50 or less left at the end of the month, a drop of 20,700 people since the May 2013 findings (1.20 million left with €50 or less in May). 493,800 have nothing left at the end of the month a drop of 24,200 since May 2013 (518,000).

Disposable Income Findings
Disposable Income:
All Adults 3.453m
Working Adults 1.78m
14% (493,800)
11% (192,200)
7% (259,000)
6% (101,500)
13% (435,100)
10% (185,100)
18% (625,000)
18% (315,100)
10% (335,000)
10% (172,700)
7% (231,300)
7% (126,400)
4% (148,500)
4% (81,900)
6% (196,800)
8% (137,100)
2% (89,800)
3% (46,300)
1% (48,300)
2% (32,000)
4% (124,300)
4% (80,000)
14% (466,100)
17% (309,700)

While much of the above indicates good news, the research did find that almost 4 in 10 or (38%) of the population have to put off paying their essential bills on time because they cannot afford to pay them. This is up slightly on the May 2013 figures. 98% of those people that are putting off their bills have had to sacrifice spending in other areas of their household budget. Worryingly, 73% of those who have had to sacrifice spending in other areas, do so primarily on footwear and clothes, with a further 38% sacrificing spend on health insurance and 34% on food.

On a positive note, we see continued improvement in the amount of money people are saving every month. This has increased to €187 in September, up from €170 in May 2013. It is important to note though that a larger group of people (6 in 10) adults still are not in a position to save money month on month.

In September 2013, we also touched on the area of insurance. We found that 9 in 10 adult consumers have at least one insurance product in their household. Car, health and home insurance are the most common, with car and health insurance considered the most important.

Only 20% of insurance product owners feel that they get value for the money they pay for their policy. 60% stated that given the necessity of insurance products, they definitely could be cheaper. A further 20% said they most definitely don’t get the best value they could on the insurance products they hold. Almost half (48%) have had to sacrifice spending in other areas of the household budget to pay for an insurance policy. Those most likely to sacrifice spending do so most commonly on car (42%) and health insurance (39%).

Over a third (35%) of insurance owners have given up at least one of their insurance products in the last 12 months. On receiving an insurance renewal notice, 7 in 10 actively seek cheaper quotes from other providers. 20% try and negotiate a better deal with their current provider and 10% will simply pay the sum requested. 5 in 10 have switched their insurance provider in the last 12 months.

It is heartening to see the first indications of possible recovery for people around the country. However, there is still a long way to go. It will be interesting over the coming months to see how Budget 2014, the further increase in gas prices and winter costs in general will impact disposable income and the ability of people to pay their bills.