UNDER-40s may be young and free and possibly even single but they are also financially feckless, according to a new report.
When it comes to making ends meet or planning for their financial future, Irish over-40s leave their juniors in the ha’penny place, the report by the Financial Regulator has found.
It shows that financial savvy increases with age, with 20-somethings worst at managing their finances and over-70s being especially capable.
Most Irish people were failing to plan ahead for their finances even before the recession struck, the report on consumers’ financial capability also found. Over half of those surveyed made no provision for a drop in income or major expense, and had no personal pension.
The research on which the report is based was carried out between October 2007 and January 2008, before the economy worsened, leading the regulator to conclude that many of those who then appeared to be at risk in their financial planning are now in difficulty.
The regulator says the failure of so many people to plan for the future gives cause for concern. Some 43 per cent said they tended to “live for today and let tomorrow take care of itself” and 60 per cent did not want to cut back on their current lifestyle to provide for the future.
Over half of under-65s have no idea what the current value of the State pension was and, when told the amount, two-thirds said it wouldn’t be enough to provide for them in their retirement. Despite this, only 32 per cent have an occupational or personal pension.
In contrast, the survey found that most people were doing quite well at making ends meet.
It also found that keeping a close track on your finances is not a prerequisite for making ends meet.
Some 60 per cent of people said they were keeping up with bills and other commitments without any difficulty. Only 2 per cent reporting falling behind on payments.
Four out of five people claimed to be very organised in managing their money day-to-day but this contrasts with the evidence; most people don’t keep any record of withdrawals from their current account and 68 per cent don’t keep records of spending on food and daily activities.
The research shows that 28 per cent of consumers have no savings while 60 per cent have no borrowings.
According to the report, consumers do remarkably little shopping around for financial products and often buy products on advice from friends or family.