Household Finance and Consumption Survey 2023

The household reference person was asked a question to test financial literacy. The question asked was:

“Imagine leaving €1,000 in a current account that pays 1% interest and no charges. Imagine also that prices increase by 2%. Do you think that if you withdraw the money in a year's time you will be able to buy the same amount of goods as if you spent the €1,000 today?”

The possible responses were:

1 - Yes

2 - No, I will be able to buy less

3 - No, I will be able to buy more

4 - I don’t know

The correct answer was option number two. Most households, 85%, gave this answer. The answer option of “I don’t know” or an incorrect answer was given by 14% of households with the remaining 1% not providing any answer. The median net wealth of households that answered correctly was €264,000 compared with €198,300 for those that did not. See figure 8.1 and PxStat table HFC2062.

When it comes to the different types of debt a household can have, those that answered correctly were more likely to have loans or mortgages and those that answered incorrectly were more likely to have overdraft or credit card debt. See figure 8.2 and PxStat table HFC2063.

The household reference person was asked a question to test propensity to spend. The question asked was:

“Imagine you unexpectedly receive money from a lottery, equal to the amount of income your household receives in a month. What percent would you spend over the next 12 months on goods and services, as opposed to any amount you would save for later or use to repay loans?”

One fifth (20%) of households said they would spend 100% of the money, another fifth (22%) would use all the money to save, invest or repay debt. Another fifth (22%) would split the money evenly between spending and either saving, investing or repaying debt. Again, a further fifth (18%), would use a larger share of the money to either save, spend or repay debt while 7% would spend a larger share of the money. One in ten (11%) did not know what they would do with the money.

The households that said they would spend all the money had the highest median net wealth and those that said they would save, invest or repay debt with all of the money had the lowest median net wealth. The households that said they would spend it all tended to have an older reference person, median age of 54 compared with a median age of 50 for those that said they would save, invest or repay debt with all of it, so perhaps they have less reason to hold onto the winnings if they are more likely to be retired. See figure 8.3 and PxStat table HFC2065.

The household reference person was asked a question to test financial impatience. The question asked was:

“You have won the lottery and will receive a sum equal to your household’s yearly income. You will receive the money in a year’s time. However, if you sacrifice part of the sum you can collect the rest of your win immediately. What percentage of your win would you sacrifice to obtain the money immediately? The possible answers were:

1 - Sacrifice 20% of your win

2 - Sacrifice 10% of your win

3 - Sacrifice 5% of your win

4 - Sacrifice 2% of your win

5 - Not sacrifice anything

6 - I don’t know

The majority, three fifths (59%), of households would wait until a year’s time to collect the money, one fifth (20%) would sacrifice 20% of the win to get the money immediately, a further 3% would sacrifice 10% of the win, 5% would sacrifice 5% of the win, 9% would sacrifice 2% of the win and 4% of households did not know what they would do.

Households that chose to sacrifice a larger percentage of the win were more likely to have lower incomes. Households that would sacrifice 20% of the win had the lowest median gross income, while those who would sacrifice 2% or none at all, had the highest incomes. Age is also a factor in the decision, as those households that said they would sacrifice 20% were more likely to be older. They had a median age of 58 compared with a median age of 50 for those that would not sacrifice anything. See figure 8.4 and PxStat table HFC2064.