More than 80% of Irish now saving

More than 80% of Irish people are now saving, with the majority saving for emergency funds, according to the latest figures in the latest Postbank Quarterly Savings Index, published today.

The Postbank Quarterly Index, which began at the end of 2008, tracks Irish perceptions on savings and spending at quarterly intervals during the year.

With four quarterly reports now completed it is clear that 2009 was the year that Irish people rediscovered their savings habits and became more sensible in spending.

The number of people saving has risen by 7% in the past year, with more than 80% of Irish adults now saving.

The average amount of savings is around €305 per month, down from €344 when the Index began in 2008, a reduction of 12%.

"We are seeing an increasing number of people saving smaller amounts," said John Donegan, head of marketing at Postbank. "We are also seeing that the gap between men and women saving has been reduced dramatically, with men likely to save larger amounts.

"The switch from spending to saving more is a product of the economic circumstances, as we build up a buffer during times of uncertainty."

The ESRI expects to see savings stay high in Ireland, with indications that in 2010 people will save about 13% of their income, which is the highest level since 1978. This is then expected to fall off after 2010 with a gradual return to increased spending.

The outlook for savings over the next months reflects a continuing trend to lower savings levels.

Some 25% of people surveyed said they were likely to reduce the amount they save in the coming quarter, only 2% indicated that they were likely to stop saving altogether.

This has been a consistent pattern over the last year with people reducing saving amounts but still continuing to save.

In terms of what people are saving for, the rainy day factor has been constant since the Index began.

Having an emergency fund or safety net remains by far and away the most powerful motivation for savers.

For the first time since the Postbank Index began in 2008, more than half of savers believe that they will have to dip into their savings in the coming months. Looking ahead to the next three months, more and more of us will be relying on savings to help with current expenditures.

Women in particular look likely to dip into their savings with a nine per cent rise to 56% in the number who will have to reduce their balances in the coming months.

With Christmas around the country, savings normally feature in people’s spending plans. This year Christmas spending looks likely to be well down on previous years.

When asked how much people were planning on spending on Christmas more than half said that they would be spending under €500, well down on previous years.

Only a relatively small group, 13% per cent, were planning on spending more than €1000. Other consumer surveys in 2007 and 2008 estimated average Irish Christmas spending at in excess of €1300.

According to Postbank’s John Donegan, the Postbank Quarterly Savings Index gives an important barometer of the economic and financial perceptions of the adult population.

"The Index gives us a long term view of how people’s attitudes have changed or in some cases strengthened over time," he said. "Over the last year the real story has been about people’s need for security and their concerns about where to place their money.

"The Index has shown that people are still concerned about having a safe place for their savings.”