Third Irish League of Credit Unions ‘What’s Left’ Tracker 2012

Media Release: 22 October 2012

1,855,000 left with €100 or less at the end of the month after essential bills are paid (increase of 35,000)

 

70% of people are unable to save money, the highest level to date

 

Half of all adults now struggling to pay their bills on time - the highest level this year

 

42% of consumers have had to borrow money to pay bills in the last 12 months, increase on June figures

 

 Utility bills are now the second most expensive essential bill

 

52% feel that the introduction of property tax is unfair since they already paid a property tax in the form of stamp duty

 

96% of consumers are worried about the impact the 2013 Budget will have on their incomes

 

8 in 10 consumers are worried that they won’t be able to cope with the increasing energy costs this winter

 

20% of people will be seriously cutting back on expenditure this Christmas

 

Fix you Finances update including analysis by independent financial advisor Frank Conway at www.fixyourfinances.ie

 

The Irish League of Credit Unions (ILCU) has today published the third round of the 2012 ‘What’s Left’ tracker series.  Throughout 2011 and 2012 the trackers have been recording the challenges facing households in terms of expenditure, how much disposable income Irish people have, where they are spending their money and the financial hardships they are facing. The third round toucheson energy cost increases ahead of winter, the property tax, household charges and the upcoming Budget 2013 in addition to disposable income.

To coincide with the 2012 series, the ILCU launched the Fix your Finances project and introduced four independent cases studies all of whom have their own financial concerns and challenges. The case studies can be followed through the website where updated video diaries, pictures and information are available.  This time around you can check out what happened when our financial expert met the group and hear his opinions on each case studies individual situations.

October 2012 ‘What’s Left’ Tracker Findings

Disposable Income

Disposable income has continued to fall over the past 6 months. Between June and October 2012 there has been an increase of 28,000 in the number of all adults with nothing left after essential bills are paid. There has also been an increase of 18,000 in the number of working adults with nothing left at the end of the month after the bills are paid. Those people living with €50 or less per month has increased to 1,365,000 and those living on €100 or less, has also increased to1,855,000.

Money Left (ALL):

 

All Adults (Oct 2012)

 

All Adults (June 2012)

 

None

 

18% (630,000)

 

17% (602,000)

 

<€20

 

7% (245,000)

 

6% (220,500)

 

€21-€50

 

14% (490,000)

 

13% (444,500)

 

€51-€100

 

14% (490,000)

 

16% (553,000)

 

€101-€150

 

9% (315,000)

 

11% (399,000)

 

€151-€200

 

9% (315,000)

 

8% (259,000)

 

€201-€250

 

6% (210,000)

 

4% (154,000)

 

€251-€300

 

4% (140,000)

 

5% (175,000)

 

€301-€350

 

2% (70,000)

 

3% (91,000)

 

€351-€400

 

3% (105,000)

 

2% (59,500)

 

€401-€500

 

3% (105,000)

 

5% (175,000)

 

€500+

 

11% (385,000)

 

10% (367,500)

 

 

Sentiment (of those with 5% or less of their income left)

Consumer sentiment remains weak particularly among those with little or no income left at the end of the month. Of this group (less than 5% of their income left), 90% now worry about how they will cope if unforeseen expenses arise. 60% believe they are living to work as opposed to working to live.

Sentiment (of those with 5% or less of their income left)

Those who have 5% or less income left after bills

 

Agree

April    Jun   Oct     Jan      Apr    Jun   Oct      

I worry how I will cope in the future if unforeseen expenses were to arise

 

83%

 

85%

 

83%

 

82%

 

84%

 

87%

 

90%

 

If any further changes were to be made to social welfare / income tax I won’t cope

 

74%

 

82%

 

71%

 

71%

 

73%

 

81%

 

81%

 

I’m living to work as opposed to working to live

 

60%

 

62%

 

57%

 

59%

 

57%

 

61%

 

60%

 

I do not see a future for myself/my family in  Ireland

 

36%

 

45%

 

38%

 

41%

 

41%

 

41%

 

43%

 

With changes to the minimum wage I would be better off not working

 

30%

 

43%

 

41%

 

33%

 

31%

 

38%

 

40%

 

 

Delayed Bill Payments

50% of consumers (up from 47% in June) are now struggling to pay their household bills on time. TV License (17%), bin charges (10%) and TV / telecoms (8%) are the most likely bills to be put off by consumers.

85% of all adults are worried about paying their bills on time. Of those who fall behind in their bill payments 24% suffer from huge worry and stress.

In the past 12 months, 42% of consumers had to borrow money to meet their household bills (increase from 40% in June). 58% turned to family and friends and 24% used credit union loans to meet their household bills.

42% Forced to Borrow Money to Meet Household Bills this Year:

 

Oct 2012

 

Credit Union

 

24%

 

Money Lender

 

10%

 

Bank

 

4%

 

Credit Card

 

4%

 

Other (Family and Friends)

 

58%

 

 

Essential Bills

Mortgage / rent continue to be the most expensive bills for the majority of Irish adults (70%). Utility bills are now the second most expensive bill - this may be the result of the increase in gas and electricity prices and the colder weather. Transport and car related costs continue to creep up the list and now sit in fourth position.

Top Essential Bills:

 

Apr

 

June

 

Oct

 

Jan

 

Apr

 

June

 

Oct

 

1. Mortgage / Rent

 

72%

 

76%

 

75%

 

75%

 

74%

 

72%

 

70%

 

2. Utility Bills

 

55%

 

58%

 

56%

 

59%

 

55%

 

54%

 

56%

 

3. Groceries / Shopping

 

51%

 

51%

 

55%

 

62%

 

61%

 

57%

 

55%

 

4. Transport / Car

 

26%

 

26%

 

26%

 

25%

 

29%

 

31%

 

32%

 

5. Loans / Repayments

 

25%

 

25%

 

28%

 

22%

 

21%

 

27%

 

27%

 

6. Health Insurance

 

24%

 

19%

 

18%

 

21%

 

18%

 

19%

 

21%

 

7. Credit Cards

 

25%

 

24%

 

24%

 

18%

 

21%

 

18%

 

19%

 

8. Education / Fees

 

9%

 

8%

 

11%

 

8%

 

7%

 

9%

 

8%

 

9. Childcare

 

5%

 

5%

 

5%

 

6%

 

6%

 

7%

 

6%

 

10. Telecoms / TV

 

5%

 

7%

 

5%

 

6%

 

8%

 

6%

 

6%

 

 

Property Tax – Attitudes of Home Owners

Three quarters (75%) of homeowners have an issue with the property tax. 23% of home owners fear that they will not be able to afford to pay it. An additional 52% feel that the introduction of property tax is unfair since they already paid a property tax in the form of stamp duty. 10% think it is a good idea as most European countries have this type of tax, 15% believe that a property tax is a good idea but should be based on the value of the home.

83% of homeowners believe that property tax should allow for possible exemptions to accommodate vulnerable groups i.e. low income earners, pensioners, unemployed and those in negative equity. 17% stated that there should be no exemptions.

When asked which option would be of preference given that the tax is being introduced, 67% of homeowners said they were in favour of bands or value of the property, 19% are in favour of a flat charge and 14% on the value of the site.

Property Tax :

 

Homeowners

 

A good idea, most European countries have this type of tax

 

10%

 

A good idea but I do think it should be based on the value of your home

 

15%

 

I definitely will not be able to afford any property tax, my income is already stretched

 

23%

 

As a home owner, I’ve already paid property tax (i.e. Stamp Duty). This is double taxation so I don’t agree with the introduction of another form of property tax for home owners.

 

52%

 

 

Home owners would be most in favour of the following:

Property Tax :

 

Homeowners

 

1. Bands (sliding scale depending on the value of the property)

 

46%

 

2. Based on value of house

 

21%

 

3. Flat charge

 

19%

 

4. Value of site (paid on the value of the land on which your property sits)

 

14%

 

 

Household Charge

37% of households have not paid the household charge to date.

Of those that have paid 6 in 10 are unhappy with those who haven’t paid the household charge - 24% say they are annoyed that those who have not paid are getting away with it, 20% believe that those who have not paid should do so, 17% stated that those who haven’t paid should be penalized and 19% stated that some people genuinely cannot afford to pay it.

Attitudes towards those who haven’t paid:

 

 

I am annoyed they are getting away with it

 

24%

 

People who haven’t paid should do so

 

20%

 

I hope those who didn’t pay are penalised

 

17%

 

It’s fine – it’s a personal decision

 

20%

 

Some people genuinely cannot afford it

 

19%

 

 

Budget 2013

9 out of 10 adults (96%) are worried about the upcoming Budget and the impact it will have on their incomes. Irish people are most worried about income tax increases 47%) followed by changes in social welfare (16%) and fuel increases (14%). The top three are followed by VAT increases (7%), cuts to carer / disability allowance (3%) and further increases to university fees (4%).

Most Worried About:

 

Oct 2011

 

Oct 2012

 

1. Income Tax Increases

 

61%

 

47%

 

2. Social Welfare Changes

 

19%

 

16%

 

3. Fuel Increases

 

12%

 

14%

 

4. VAT Increases

 

4%

 

7%

 

5. Further Increases to University Fees

 

n/a

 

4%

 

6. Cuts to Carer  / Disability Allowance

 

n/a

 

3%

 

7. Free Travel

 

n/a

 

3%

 

5. Insurance Levy

 

3%

 

3%

 

6. Alcohol / Cigarettes

 

1%

 

2%

 

 

Gas and Electricity Prices

8 in 10 adults (85%) are concerned about the increasing energy costs this winter. Almost 4 in 10 (38%) will struggle to manage and almost half fear that their household budget will be over stretched or they will be unable to cope with the increased costs. When funding the increased energy costs almost half (49%) will use their already stretched incomes, a further 13% will have to dip into savings while another 6% plan to switch to another utility provider in order to save money. 5% will rely on social welfare benefits and 4% will use child benefit.

Funding the Increased Costs of Electricity and Gas This Winter:

 

Jun

 

Oct

 

Income

 

53%

 

49%

 

Savings

 

15%

 

13%

 

Switch to Another Provider

 

n/a

 

6%

 

Social Welfare Benefits

 

7%

 

5%

 

Get a Prepaid Meter Installed

 

n/a

 

4%

 

Children’s Allowance

 

6%

 

4%

 

Credit Card

 

5%

 

3%

 

Loan

 

3%

 

3%

 

Money Lender

 

2%

 

1%

 

Other (Don’t Know, Will cut back in other areas, Reduce consumption)

 

9%

 

11%

 

 

Saving

Less than 3 in 10 people (29%) are able to save money on a monthly basis. This means that 70% cannot save any money and are living month to month. This is the highest level in the past 12 months. Of those that can save, the average amount that has been put away is €200, a slight increase (3%) on the June figure of €195.

Saving Each Month:

 

Jun 2011

 

Oct 2011

 

Jan 2011

 

Mar 2012

 

Jun 2012

 

Oct 2012

 

<€50

 

19%

 

14%

 

12%

 

13%

 

14%

 

9%

 

€51-€100

 

15%

 

13%

 

18%

 

18%

 

16%

 

19%

 

€101-€150

 

10%

 

10%

 

14%

 

14%

 

9%

 

11%

 

€151-€200

 

9%

 

11%

 

11%

 

9%

 

16%

 

18%

 

€201-€250

 

8%

 

11%

 

9%

 

9%

 

6%

 

7%

 

€251-€300

 

7%

 

6%

 

9%

 

7%

 

11%

 

8%

 

€301+

 

32%

 

35%

 

27%

 

30%

 

27%

 

29%

 

 

Preparing for Christmas

Over two thirds of Irish people are already preparing for the expense of Christmas. 20% state that they will be seriously cutting back on expenditure this year, 16% have been putting a little away throughout the year, 15% said their income will cover it, 14% will dip into savings and 10% will use their credit cards. 7% stated that their family cannot afford the expense of Christmas this year, 2% will borrow from money lenders and a further 31% stated that they are not preparing in any way just yet.

Preparation for Christmas Related Expenses

 

Oct 2012

 

I will be seriously cutting back on expenditure this year

 

20%

 

I have been putting a little away throughout the year so I should be ok

 

16%

 

My income will cover it

 

15%

 

I will dip into my savings

 

14%

 

I will use my credit card

 

10%

 

My family cannot afford the expense of Christmas this year

 

7%

 

I will have to borrow from money lenders

 

2%

 

I am not preparing

 

16%

 

I haven’t started planning yet

 

15%

 

 

Commenting on the latest round of the ‘What’s Left’ Disposable Income Tracker ILCU CEO Kieron Brennan said:"

This is the third round of our 2012 What’s Left’ Series and some concerning statistics have arisen. For many, the challenge to simply survive continues. Disposable income continues to decrease with an increase of 35,000 in the numbers with just €100 or less at the end of the month. Half of consumers are now living month to month, with only 3 in 10 able to save any money at the end month. This is the lowest level of those in a position to save since the tracker began in 2011.

Also worryingly, consumer sentiment has fallen, particularly among those with little or no income left at the end of the month - 43% of this group now believe that there is no future for themselves or their family in this country.

The increased cost of energy has meant that household heating and electricity bills are on the rise and will hit people hard this winter and of course there is concern over what Budget 2013 will contain and how it will impact already stretched incomes. I also think people need to think long and hard about Christmas this year and whether they can afford to get caught in the buying frenzy that begins in earnest after the Halloween break. Remember to shop around for the best value and only spend what you can afford, sit down and work out a budget for the season before you start spending and stick to it."

About the Tracker Survey

The survey was conducted by Market Research Company iReach during the period of September 2012 using the iReach Consumer Decisions Research Panel which delivered 1,000 responses from adults in Ireland aged 18+ to 65+ and is nationally representative by Age, Region, Gender and Social Class. This research has a confidence level of 95% and confidence interval of 4%.

About the Irish League of Credit Unions

The Irish League of Credit Unions is the representative body for over 487 Credit Unions on the island of Ireland.  It is Ireland’s successful, not-for-profit, financial co-operative.

For further information, or to speak to one of the case studies, please contact Emma Casey, ILCU Communications Department 01 614 6781 / 087 688 1571.

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