One in five Irish households is spending more than they earn, while almost a third leave bills unpaid to cope with negative savings, a new report has found.

According to a report from the Central Bank, 46 per cent of households are balancing their books, with a third spending less than they earn.

That compares with 11 per cent of households in the euro area that said they were in negative savings, with 41 per cent spending less than they earn.

The report also indicated that some Irish households may find it difficult to cope with any volatility in income levels in the future due to their indebtedness. That was underlined by further evidence that Irish households were more likely to leave bills unpaid if they did find themselves in financial distress than other euro countries. About 31 per cent said they dealt with negative savings in such a way.

The report said about 60 per cent of Irish households are saving as a precaution as they try to build a buffer against unexpected events and for future needs.

Almost half of households are saving to cover unexpected events, with 31 per cent putting money away to fund education or to support their children.

However, only just over a quarter said they were saving to fund their old age, compared with the euro area average of 40 per cent.

Irish households were more likely to be saving to pay down debt than their European counterparts, with 12 per cent in Ireland saying it was their chief reason for saving compared with 7 per cent in the euro area.