According to the findings of a recent survey, one-in-seven people in Ireland would be unable to cope financially if they were faced with an emergency which cost €1,000 or more.
The Credit Union Consumer Sentiment survey found that a large number of people would struggle if they were hit by a major bill, such as an emergency car repair or replacing household appliances.
Economist Austin Hughes told The Pat Kenny Show that the survey has been conducted for “the last five or six years”, and findings have remained fairly consistent.
“That’s not entirely surprising given the cost-of-living crisis and its impact on household finances,” he said.
“What we find is that there are wide variations in consumer financial circumstances because we have wide variations in incomes in the economy."
Mr Hughes said that many of those who would struggle would be on “decent incomes”, with a “decent amount of money coming in each month”.
Man with many bills or invoices and no money. Alamy 2024“The 45-to-64 [group] probably reflects a broad range of groups,” he said.
“I think there’s a group who are silently struggling there, who probably have the job, the car, maybe the holiday in Benidorm or that.
“But at the end of each month, there are very significant difficulties matching the incomings and the outgoings.
“In that regard, they’re just living close to the edge, paycheck-to-paycheck each month.”
'Debt aversion'
According to Mr Hughes, the survey also suggests that Irish people are particularly “debt averse”, likely as a result of the financial crisis.
“When we ask people, ‘Would you put it on a credit card?’, it’s a six per cent answer,” he said.
“Use an overdraft or term loan from a bank or credit union, five per cent.
“More people are borrowing from a friend or family; that’s eight per cent.
“There is that debt aversion, whereas this study is based on a similar study that’s carried out in the US by the Federal Reserve there, and they find that the majority of people there would actually put it on a credit card.”
Mr Hughes said that while the “macro economy” is doing well at the moment, “the rising tide doesn’t lift all boats to the same degree”.
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