LIVING WELL IS TOP PRIORITY

Irish people prioritise living well over paying off their debts.

Figures released by international consumer think-tank, The Future Foundation, have revealed that one in two Irish people regard ‘living well’ as more important than paying off debt (one in four) , saving for retirement (one in five) or leaving an inheritance (one in ten).

Irish Priorities

According to the Future Foundation’s pan-European statistics, owning luxury items remains a priority for Irish people, with 38% citing ‘having the things their family want’ as the most important reason to borrow money.

However, for 75% of Irish consumers, paying utility bills remains their top financial priority. Meabh Quoirin, Director of The Future Foundation, says, “paying utility bills is the top financial priority, and making sure that the basics are taken care of.”

The Irish, along with the Nordic countries, were found to make the financial services system work harder for them, with Irish people the most likely to have a savings product while also being in debt.

Commenting on these financial services findings, Quoirin said Irish people are today comfortable handling debt and credit partly because of their confidence in the economy here.

“Peoples’ aspirations tend to grow at the same rate as economic growth. In an era of rising affluence people are more comfortable holding both debt and savings. If inflation is reasonably low then they’re happy to manage that debt and still save up for something. The Irish economy has been one of the success stories over the last few years and people seem to be comfortable managing their different financial products and services,” said Quoirin.

Financial Sophistication

The research identified varying levels of consumer financial sophistication among consumers across Europe, defined by the number of financial products held and the use of new financial channels such as internet banking. Irish people were found to own an average of four different financial service products, just behind the savvy Swedes who have seven and ahead of the Russians who prop up the table with an average of just one financial product per person.

“People are now more experienced consumers when it comes to financial services. The four big financial service products include a pension, a savings and current account, and a mortgage. Four is towards the high side. Customers in the Nordic region went as high as seven services but then it also went down as far as one product in Russia,” explained the director.

“We find the Scandinavian countries are more sophisticated than anywhere else in Europe on a lot of these issues. A lot of it is driven by the state of the economy and the level of trust that people have in that economy. In somewhere like Russia where there has been a lot of scandals and corruption people aren’t as comfortable investing in financial institutions,” continued Quoirin.

Trusting Financial Institutions

Seemingly unaffected by high profile financial services scandals, the Irish, along with the Danes, where found to have the highest level of trust in financial institutions in Europe. Also, the Irish are the third most likely to research financial services, with 37% researching products before buying.

“Irish people seemed to be keener than most to do the reading and research behind financial services suggesting that they take a more active interest and engage with financial providers. The Irish trust the financial institutions with some of the biggest decisions they make in their lives. It is a higher level of trust than in other countries. We also saw a growth in internet banking in Ireland which was one of the measures indicating sophisticated financial services adoption and use,” commented the director.

Retirement Nest Eggs

Another interesting find was that nowadays Irish consumers also believe strongly in planning for more than one source of income for retirement. This is in an aim to make them more valuable for a later date. They can do this when the wealth of economy is on their side. “Where a lot of economies have had a boom in house prices people are sitting on a lot of equity and people see that as a big income for retirement. Increasingly people have been quite shaken up by pensions not being as valuable as they were expecting them to be. That’s happened in a number of different economies and now they’re not relying on one nest egg,” concluded Quoirin.