Households stashing more cash in banks despite income squeeze
HOUSEHOLDS are putting more money in banks and credit union accounts despite the ongoing squeeze on incomes.
New figures show that the gross savings of households now stands at €12.87bn. This works out at €7,568 per household.
And the amount being saved is going up, even though incomes are going down.
The Central Statistics Office said yesterday that an extra €637m was saved by householders last year.
This was at a time when the overall income of the nation's 1.7 million households fell.
The CSO figures show that the average household saw its gross income drop to €52,250 in 2011, down from €52,458 in 2010.
Spending by households is also down, as consumers examine every cent they have to pay out.
Consumption expenditure fell by close to €1bn down to €78.35bn during the last year, the CSO said.
This means the average household is spending around €46,086 a year on groceries, heating, mortgages and rent and other bills.
The CSO said what it called the savings ratio -- savings as a percentage of disposable income -- hit 14.1pc last year. This ratio is made up of savings, but also takes account of money paid off on debts.
Disposable incomes for most families remain under huge pressure.
More than one million adults in Ireland have less than €50 left over after paying essential bills each month, according to a survey commissioned by the Irish League of Credit Unions.
Mortgages and rents are among the most expensive bills for most, with groceries taking second place. This is followed by utility bills.
But financial experts said that some sections of society were not under the same financial pressure.
Higher-paid public servants, retired people with public sector or good private sector pensions, and many of those in semi-states have escaped the worst of the hit on incomes.
These people are among those who are able to save every month, while huge numbers of families with young children are unable to save as they are burdened with massive mortgages and other debts.
For those who can save, banks are competing hard to offer high interest rates for deposits.
AIB, Ulster Bank and EBS each offer 4pc for those prepared to put money aside every month.
And Permanent TSB, Bank of Ireland and RaboDirect offer 3pc or more for those who are able to save every month.
However, higher taxes on savings and rising inflation are eating away at the real value of savings, personal finance experts said.