1 in 4 Irish People Have Less Than €500 Set Aside for a Rainy Day

One in four (25pc) Irish adults have less than €500 set aside for a rainy day, with almost half of these (9pc) reporting that they have no financial cushion at all.

Most people (65pc) have a financial cushion of less than €5,000, while more than half (53pc) have less than €3,000.

This is according to the findings of a new survey by Capital Credit Union of more than 3,700 adults, which also revealed that almost half (45pc) of Irish people are saving more regularly than they have in the past and that one in four (24pc) are saving less frequently.

Headline findings from the Capital Credit Union survey reveal that:

—  Two in ten (20pc) have an emergency fund of €10,000 or more.

—  More than three in ten people in their 30s have less than €500 of an emergency fund set aside.

—  More than one in ten people aged between 30 and 60 do not have any financial cushion at all. Those in their 70s are the least likely (5pc) to be in this position.

—  Men are more inclined than women to have a large financial cushion in the wings: one in ten (10pc) men have an emergency fund of more than €30,000 but just 6pc of women would have this amount set aside. Furthermore, men are almost twice as likely as women to have a financial cushion of €50,000 or more (5.25pc versus 2.9pc).

Table 1: How much money do you have set aside in case of a financial emergency

Commenting on the survey findings, Pat Byrne, Chief Executive Officer at Capital Credit Union said:

“It’s always important to set aside some savings to tide you over at times of emergency, unforeseen problems – or when income is unexpectedly low. No matter how smooth life is or how financially comfortable you are, life is unpredictable, and things can take a turn for the worse when we least expect it. Having an emergency fund in the wings can be invaluable when the unexpected – such as the loss of a job, someone being unwell, or a car accident – happens.

It is a concern that our research shows that one in four Irish adults have less than €500 set aside for a rainy day. This would be unlikely to even last a week if a person lost their job.

The majority of Irish adults were found to have a financial cushion of €5,000 but even this might not be enough when a financial emergency hits, particularly if unable to work for a prolonged time – given the high bills which so many families have today.

Building up an emergency fund where possible is a core tenet of effective money management. Adequacy is key. Some financial advisers recommend building up a fund equivalent to about three months’ of your salary; others advise setting aside a year’s salary.”

Other headline findings from the Capital Credit Union survey include:

—  Two-thirds (66pc) of those in their 20s are saving more regularly now than was the case in the past – making this age group the most likely one to be saving more. By comparison, less than half (46pc) of those aged 30, 40 and 50 say they are saving more regularly now.

—  Of those who have savings, almost three in four (74pc) are likely to be earning little or no interest on it as their money is kept in a readily accessible account.

—  More than half (56pc) of people keep their savings in a readily accessible account so that they can take money out whenever they need to while about one in five (18pc) say they keep all savings in a readily accessible account because they wouldn’t know what else to do with the money.

Mr Byrne added:

“One in four Irish people are saving less regularly than they have in recent years. This tallies with a recent report from the CSO, which found that the amount saved by Irish households has fallen, with households saving about an eighth (12.7pc) of their income in the second quarter of 2024– down from 14.6pc in the first three months of the year.

This is likely a reflection of the impact of high living costs on people – households are using a larger portion of their disposable income to cover basic expenses such as food, energy, and housing, leaving less for savings.

The tax changes and €2.2bn cost-of-living package announced in October’s Budget should put more money back into many people’s pockets and hopefully allow them to save more – but if this arises, it is important that people are prudent with their savings. Having large lump sums sitting in deposit accounts that earn little or no interest is not the best approach to savings.

While having immediate access to some savings is always a good idea, it’s important that the bulk of savings are in accounts where your money works for you. Most financial institutions today offer some accounts that pay interest above-the-rate of inflation and savers should make it their priority to check out these options.”