The cost of living in Ireland remains a pressing concern for many households, even as official figures suggest inflation is cooling. While the annual inflation rate eased to 1.7% in May 2025 – below the European Central Bank’s target – most people don’t feel prices are moderating. That’s because, although the pace of price increases has slowed, the elevated costs for essentials like food, housing, and transport persist. In this environment, managing your finances with intention is more important than ever.
Understanding the Cost of Living in Ireland
Ireland’s inflation rate has fluctuated in recent years, but even as it trends downward, the legacy of previous price hikes means everyday expenses remain high. Sectors such as food, recreation, restaurants and hotels, transport and health have all seen significant cost increases, squeezing household budgets.
Budgeting
A robust budget is your first line of defence against rising living costs. To make your budget work harder, start by reviewing your bank accounts for direct debits or standing orders for services you no longer use or need. Cancel any unnecessary subscriptions or payments to free up cash flow.
As most providers now insist on payment by direct debit there is a tendency to forget about these costs which can result in you overpaying for extended periods of time before you notice. Print off your recent utility bills and consider the following:
- Are you with the cheapest provider available for your energy, broadband, or other utilities?
- Are you on the best tariff or plan currently offered by your provider?
- Is your usage higher than necessary, and are there ways to reduce consumption?
Additionally, check what you are paying in bank charges. If your current bank is charging high fees, research alternative banks to see if a better deal is available elsewhere. Switching banks can often result in lower fees.
Digital tools and budgeting apps can help you track spending, set realistic goals, and identify further areas where you can cut back. Regularly reviewing your budget ensures you adapt as your circumstances change.
Build an Emergency Fund
An emergency fund is essential for financial resilience. It acts as a buffer against unexpected expenses – whether that’s a job loss, medical emergency, or home or car repairs. Financial advisors recommend saving enough to cover at least three to six months of living expenses. Start small if you need to – automate savings, trim non-essential spending, and gradually build your safety net.
Make Sure Your Family Is Protected Against The Death or Illness of an Earner
Have you ever wondered how long your life insurance would maintain your family’s standard of living if you or your partner were to die prematurely? The answer for most family’s is not that long. Most people in Ireland have inadequate life cover because in the majority of cases a round figure amount of cover is taken out, rather than calculating the actual requirement. Unless you are a smoker, life cover is generally very affordable, so why not have the correct amount? Most people want to know that their family will be ok at least until the youngest reaches the age at which they would graduate from college. A Financial Planner can calculate how much cover you should have to achieve this. You would also consider living benefits like specified illness and income protection.
Claim All Your Tax Credits
Maximizing your tax credits can put more money back in your pocket. Budget 2025 introduced increases in several personal tax credits, including the personal, employee, and earned income credits, as well as credits for carers and parents. Make sure you’re claiming all the credits you’re entitled to, as these can significantly reduce your tax bill. If you’re unsure, consult Revenue’s online services or seek professional advice.
Pensions: A Tax-Efficient Way to Save for Retirement
Pensions remain one of the most tax-effective ways to save for your future. Ireland’s pension system offers substantial tax relief on contributions, especially for higher tax payers but each year you don’t use it, you lose it. Starting early and contributing regularly can make a significant difference over time.
Manage Debt Wisely
High-interest debt can erode your financial stability. Contrary to what the banking industry might suggest, you don’t need an overdraft or a credit card to manage your finances. Focus on paying down existing personal debt, starting with those carrying the highest interest rates (the “avalanche” method), or tackle smaller balances first for quick wins (the “snowball” method). Avoid taking on new debt unless unless it’s for a good purpose – something which will increase your income or your assets.
Review your mortgage interest rate to see if you can do better. Maybe your home has increased in value or your mortgage has decreased resulting in a lower Loan To Value (LTV) which may entitle you to a lower mortgage interest rate. Have you made improvements or installed energy efficient heating which may entitle you to a green mortgage (lower rate) if your BER rating has improved. If you bank is not competitive with what is available in the market consider whether you should refinance your mortgage to another provider.
Plan for Future Costs
Looking ahead is crucial. Consider future financial needs such as children’s third-level education, car replacement, or housing upgrades. Start setting aside funds for these goals as early as possible, even if contributions are modest. This proactive approach can help you avoid financial stress when these expenses arise. If the term is long enough consider investing these funds in equity base investments which pay a higher return than deposits.
Seek Professional Guidance
Financial planning can be complex, especially in a volatile economic environment. Consulting a certified financial planner can help you optimize your finances, ensure you’re making the most of tax advantages, and develop a strategy tailored to your goals and circumstances.
While the cost of living in Ireland remains challenging, you can take control by reviewing and optimizing your regular expenses, building an emergency fund, claiming all available tax credits, saving for retirement, managing debt, planning for future expenses, and seeking professional advice. These steps will help you navigate the current economic environment and build a more secure financial future.
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The material and information contained on this website is for general information purposes only. Neither the writer nor Highfield Financial Planning Ltd makes any warranty as to the completeness, accuracy or reliability of the information or the suitability or availability of products or services, referred to on the website, for any purpose. You should not rely on any information contained on this website as a basis for making any financial, legal, taxation or other decision.
© Highfield Financial Planning 13 June 2025
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