"Save more, spend less, cut debt” the mantra for Irish people in 2019

Saving more, spending less and debt pay down the top 3 financial priorities

• Sentiment towards saving and investment unchanged in January
• Confidence in investment outlook hits a fresh low despite January stock market bounce
• Retirement optimism rises but concerns about financial comfort in retirement linger

The Bank of Ireland/ESRI Savings and Investment Index, which measures sentiment towards saving and investment, was unchanged at 99 in January 2019. A weaker outlook for the saving environment caused the savings index to edge lower. In contrast investment sentiment improved slightly, mainly thanks to stronger investment patterns as investment attitudes shifted to their most positive since August.  

Additional research conducted as part of the Index showed that the top three financial New Year resolutions for Irish people in 2019 are; save more money (41%), spend less money (24%) and pay down/pay off debt (16%).  Compared to the 2018 responses it appears that Irish people are trying to be more financially prudent this year. This is particularly the case in respect of paying down debt which increased from 12% in 2018 to 16% in 2019.  

Commenting on the results of the research on new year financial resolutions, Tom McCabe, Bank of Ireland Investment Markets, said “The results of our research on new year financial resolutions show that Irish people are clearly keen on pursuing their own version of ‘Operation Financial Transformation’ in early 2019. The responses also show that, compared to 2018, Irish people are intent on being more financially prudent this year.

It’s positive to see that people are so focused on improving their personal finances this year. However, longer term financial planning issues still seem to be something of a ‘blind spot’. Only 5% of people were intent on learning more about their pension and only 3% said they would save more for retirement. This is worrying in light of improved longevity and the inevitable drop in income people face in the post retirement period.”

Investments Index

The Investment Index clawed back some of its recent losses in January, rising from 96 to 97, spurred by improving attitudes to investment which reached their strongest since August. The percentage of regular investors inched higher to 33% in January from 32% in December and people also appeared more comfortable around the amounts they were investing each month. 63% of people felt they were investing the correct amount in January, up from 57% in December.

However the pessimism around the outlook for markets continues to linger – the Investment Environment sub index hit a fresh lifetime low of 90 even as stock markets rebounded impressively by 7.5% in January following their December slide.

Commenting on the December results for the Bank of Ireland/ESRI Investment Index, Tom McCabe, Bank of Ireland Investment Markets said “Investors remained very downbeat in January about the investment market outlook. For the first time in the index’ history, the percentage of people that felt it was a bad time to invest outweighed those that felt it was a good time to invest. Investors clearly need a dose of good news in order to restore their faith in investment markets but the strong market rebound in January should help here.”

Savings Index

The monthly Savings Index dipped to 102 in January from 103 in December with improved attitudes towards saving more than offset by a re-emergence of some gloominess about the outlook for the saving environment, a slightly surprising development given rising concerns of a no deal Brexit. 53% of people were saving regularly in January with savings intentions boosted by spending patterns returning to normal post-Christmas. Respondents’ feedback that they were keen to save more as part of their New Year resolutions probably also impacted saving patterns in the month.   

The prospect of a hard Brexit also appears to be driving some extra precautionary saving – the percentage of regular savers in the Border Midwest region rose to 51% in January, the highest reading going all the way back to March 2010.

Retirement Optimism Index

The January results for the Bank of Ireland/ESRI Retirement Optimism Index showed a modest improvement in optimism levels around retirement with the headline index rising from 99 to 101. This was mainly driven by better sentiment around the levels of financial preparation that people had in place for retirement – 54% of people said they had some preparation in place in January, up from 51% in November. However people still seem concerned about how financially comfortable they will be in retirement – the percentage of people that felt they would find it difficult to live comfortably in retirement rose from 35% to 38%.