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Nearly one in two Irish households would need to borrow to cover an unexpected €3000 figure bill

Almost half of the Irish public would need to access some form of credit to cover the cost of a sudden but essential €3000 bill, according to a new survey by Peopl Insurance.

The survey – of 1,000 people nationwide – found that almost half of respondents wouldn’t have the cash to hand or available within a month to pay this essential bill, with a third needing to borrow. Furthermore, almost one in ten (9pc) would not be able to get the money together at all to cover a large essential bill – with women almost twice as likely as men to fall short here.

The survey – which examined the financial resilience of the Irish public – asked people how they would get the money together for a crucial bill of €3,000 that had to be paid within 30 days. This well respected international standard is an approach used to assess the ‘financial resilience’ of consumers and households.

The survey found that the public is almost split down the middle when it comes to their ability to withstand a financial shock: just over one in two (55pc) said they would have enough savings to cover the cost with the remaining 45pc having to resort to credit or other means. More than one in four of those on incomes of less than €20,000 would either have to go into arrears on their mortgage or other major bills – or would simply not be able to access the money.

Commenting on the survey findings, Paul Walsh, CEO of Peopl Insurance said:

The findings paint a worrying picture of the financial vulnerability of a large part of the Irish public at a time when rising living costs are squeezing so many households across the country – and as concerns mount that Ireland could be on the verge of another severe recession. We have just seen major layoffs at tech heavyweights such as Twitter and Meta – and more layoffs could be on the horizon elsewhere.’

He added, ‘With only half of households having access to some financial cushion, it is a stark reality that many people simply do not have a financial cushion to fall back on. Thankfully, over half of those that need to borrow would rely upon a credit union for financial help.”

That one in ten people between the ages of 25 and 34 that need to borrow would rely on moneylenders if they faced a large unexpected bill is worrying – as the annual interest rate on moneylender loans can be as high as 187pc”.

Highlights from the Financial Resilience survey included:

  • Women were almost twice as likely as men to borrow from family or friends for an important but expensive bill.
  • Men were more likely than women to have enough savings in the wings to cover an unexpected €3,000 bill – six in ten (60pc) males would draw from their savings to cover such a bill compared to five in ten women (49pc).
  • Women were more likely than men to say they wouldn’t be able to get the money together for a large but essential bill (12pc of women versus 7pc of men).
  • Credit unions were the most popular choice of lender for those faced with an unexpected large bill – with almost one in five (18pc) saying they would borrow the money from their credit union; while almost one in ten (9pc) said they would borrow from family or friends.
  • Overall, 3pc said they would have to borrow the money from their bank – while the same number of people said they would resort to a moneylender.

Unsurprisingly, the more you earn, the more likely you are to have the savings to cover an unexpected expense,” said Walsh. “Our survey found that almost three in four of those earning more than €75,000 had enough savings in the wings to cover an unexpected bill of €3,000 – but only one in three of those earning less than €20,000 were in a similar position. However, almost half of middle-income earners would not have the savings to fund such a bill – which shows the extent to which the squeezed middle are grappling with day-to-day living costs.”

Other findings from the Financial Resilience survey included:

  • Three times as many working class people in comparison to middle-income people said they would not be able to get the money for an expensive but essential bill (15pc versus 5pc).
  • Married people, those earning between €40,000 and €60,000, and those aged between 25 and 34 are more inclined than others to get money from a moneylender for a large and unexpected bill.
  • Middle-income people are more likely than the working class to have a rainy-day fund in place (some level of savings) which they can draw on for large unexpected bills.