Significant disparities in financial wellbeing across demographics in Ireland – new report
November 13, 2024
A new report from the Competition and Consumer Protection Commission (CCPC) tracks Ireland’s financial wellbeing and financial literacy across demographics.
While the overall results are positive for Ireland there are significant differences between population groups. Factors such as educational level, employment status, gender, or household composition can significantly impact people’s financial wellbeing.
Higher financial literacy is strongly linked with increased financial wellbeing across all demographic groups, however, the study also finds that women, lone parents, and the unemployed demonstrate lower levels of financial literacy than the rest of the population.
The report stresses that even though riskier and more complex products like crypto are increasingly accessible, the majority of those surveyed showed a limited understanding of how those products work. For more traditional savings, investment, and retirement products, a lack of knowledge was also apparent, with less than 40% of respondents who own such products understanding compound interest. This indicates a clear need for focused educational initiatives.
Commenting on the report, Kevin O’Brien, Commission member with the CCPC said:
“This report is a timely reminder of the varying levels of financial wellbeing and financial literacy across Ireland. Education, employment and gender can significantly affect people’s financial wellbeing; awareness of these disparities is crucial for developing targeted and more impactful policies.
More and better financial education is vital, particularly in light of the uptick in fraud and scams and the accessibility of complex financial products through fintech. Knowledge is power and financial education is protection.
The publication of Ireland’s first National Financial Literacy Strategy should be a priority for the next Government and an important step in addressing the challenge of enhancing financial literacy levels on a national level in Ireland. Our report aligns with the Department of Finance’s Mapping Report on the development of a Financial Literacy Strategy in Ireland when it comes to the real need to implement further policies and strategies to address the financial challenges of key groups like one-parent families and the unemployed or low earners.
While improved financial literacy is strongly associated with improved financial wellbeing, it is not a silver bullet. It must be combined with other policy tools, such as consumer protection laws, social welfare payments and measures to assist vulnerable groups like lone parents, the low-paid, and unemployed people in bridging the financial wellbeing gap. We are hopeful that the results of this report can guide policy makers towards the groups who would most benefit from additional resources.
In this area, consumer protection begins with financial service providers themselves. Financial services firms need to design and provide suitable products and, where advice is sought, to recommend the most suitable product.”
Phase I of this research, published last year, found that 1 in 8 can only cover their costs for a month or less in the event of income shock. 86% of households save, with most using deposit or savings accounts, however, men are more likely to engage in higher-risk saving such as the purchase of stocks and shares or investing in crypto-assets.
Find out more information on the report exploring financial wellbeing and literacy disparities across population groups in Ireland.
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