A recent study by Capital Credit Union has revealed a concerning reality for many Irish adults: one in four has savings of less than €500

Speaking on Moncrieff, John Lowe from MoneyDoctors.ie suggested that the global cost-of-living crisis has likely impacted these figures. 

“In America, 70% of the population can’t lay their hands on $1,000 - that’s a fact,” Lowe said. “So, it’s endemic right across the world.”

Interestingly, despite the widespread challenges in saving, Lowe noted that some Irish citizens are managing to accumulate substantial amounts of money. 

“We’ve €150 billion here in Ireland - including the €4.4 billion in prize bonds alone,” he said. 

“Don’t forget, they tripled the prize fund last October there. So, we’re swimming in cash basically.”

Lowe went on to highlight the importance of building an emergency fund, ideally with enough to cover three to six months of your income. 

“You should have it for three reasons,” he advised. “Number one, the emergency - your clutch goes or your automatic transmission, whichever it is. 

“Secondly, sudden loss of income - you’re put on a three-day week or you don’t get the bonus that you’re expecting. 

“The third reason is the investment opportunity you might come across, or you might want to give your son or daughter a leg up on the property ladder.”

Saving remains crucial for young adults especially, Lowe argued, given the financial hurdles of entering the property market. 

He then spoke of the challenges many people face when trying to build a reliable savings record.

“A lot of young adults who are trying to save, they’ll go to their respective lender and they’re told, ‘Have you got a savings record?’ ‘Yes, I do, and we’re saving €1,500 a month,’ and you show them the statement,” Lowe said. 

“Then there’s a withdrawal of €7,500 - that was for a holiday they decided to have there a couple of months ago. Suddenly, they’re back to square one.”

Lowe also pointed out that some parents make extraordinary efforts to save on behalf of their children, although many cannot afford it. 

“There are very few families who can afford to put that child benefit away,” he said. 

“But if you were able to put it away, from the time it starts on birth to the time it finishes - which is the 19th birthday, you will have accumulated €30,240 without any interest,” he calculated. 

“The problem is, to send one child to third-level is €42,000 - including accommodation.”

For those who do have the capacity to save larger amounts, Lowe advises putting these funds into interest-accruing accounts to maximise returns over time. 

This strategy, he suggests, could help families and single people to reach their financial goals while providing a critical safety net in times of need.

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