It’s the time of year when many people sit down to ponder their financial position and try to figure out exactly what they can afford for the year.

For perhaps the first year in six, Irish citizens can contemplate marginally better circumstances as they set their 2014 household budgets. The first mutterings about the elusive recovery are becoming more audible and backed up by some promising data.

And to that volume the Irish League of Credit Unions (ILCU) has added its voice through its latest “What’s Left” survey, a household income and expenditure tracking exercise that has followed “how ordinary people around the country have been impacted by austerity and recession”. The research has allowed the ILCU see “the huge impact the shift in the economy has had on family finances, resulting for some, in a day to day struggle to make ends meet.”
 
According to the ILCU, over the past six months the tracker research has revealed “more positivity among the population and in terms of personal finances we are perhaps seeing the beginning of recovery or maybe simply that people, having adapted to the prevailing economic conditions, are more able to manage their money and pay their bills.”

In terms of hard numbers, the good news is that the average Irish household has €367 in net disposable income (NDI) after all bills have been paid each month and this figure has risen steadily of late (at the end of April it was €220).

Item per Average Household	€
Monthly net Income (after tax)	2,707
Household/Utilities Expenses	-740
Telecoms/Home Entertainment	-113
Personal Loans/Insurance/Pension	-517
Groceries/Food/Going Out	-498
Child Related Expenses	-130
Transport Costs	-201
Personal Expenses	-141
Money left at End of Month (NDI)	367

Of course, an exercise such as this is necessarily full of compromises. In reality there is no such thing as an “average” Irish household. The makeup has almost infinite parameters (one or two adults, number of children, age of children etc.). There are also factors such as whether the household rents or owns its dwelling place, its financial position in terms of borrowing and whether the household owns a vehicle. Taken in this way, the figures above have limited relevance save for the indicator on the trend in net disposable income.

For example, the figure for Household/Utilities Expenses of €741 includes €406 for Mortgage and €152 for Rent. Of course most households will have either one or the other in their income and expenditure statement.

In fact, of those surveyed who paid a mortgage, the average monthly figure was €806, but because just 50% of Irish households have a mortgage related to their principal private residence, the “average” was just half of this. Similarly of those who pay rent, the monthly expenditure was €525 but the average was €152 as indicated above as just 29% of Irish households rent their dwelling place.

So, for the purpose of anyone looking to benchmark their personal household expenditure against the Irish average, the following selected categories (not initially disclosed by the ILCU) may be of help.

Actual Average Household Spend	€
Mortgage	806
Rent	525
Electricity	82
Credit Card Payments	282
Health Insurance	168
Personal Loan Repayments	238
Pension Contribution	163
Groceries	355
Take-Away/Eating Out	60
Nights Out	74
Petrol/Diesel	141
Clothes	57

Of course the most comprehensive analysis of personal expenditure in Ireland came about with the publication last June of the Insolvency Service of Ireland’s Set Costs guidelines for the purpose of calculating the Reasonable Living Expenses allowable to an individual applying for an insolvency scheme. The ISI’s Set Costs is the major element of the RLE (in addition to Set Costs the ISI allows expenditure on Childcare, Housing and Special Circumstances.

It is interesting to compare the ILCU’s findings with the sums allowed by the ISI. Taking a two adult household with a vehicle as a proxy for the “average” Irish household we find that the sum allowed for Set Costs is €1,407. If we add back items not included in this figure such as Rent, Mortgage, Loan Repayments, then it becomes fairly clear that Irish households are currently operating pretty close to a level of expenditure widely regarded as a fairly tight minimum when first disclosed by the ISI.

This indicates admirable cost control on the part of Irish households. Setting monthly expenditure budgets can be extremely difficult, if for no other reason than the fact that it is extremely difficult to categorise expenditure at a granular level – there are always expense categories and contingencies that torpedo the best laid plans. The fact that the ILCU’s “average” household is still able to come up with more than €300 per month in disposable income makes the ability of the Irish household to live within their means all the more impressive – something that comes as a surprise considering the spending binge of boomtime. Perhaps the lessons have been learned or, more likely, a case of necessity making a virtue.