72% do not believe they will have enough money when they retire
Bulgaria is among the EU countries where the fewest people have savings
We lag behind in financial literacy
Although everyone knows the folk wisdom that they should save “white money for rainy days”, fewer and fewer people in the country have savings, because their money barely lasts until the next paycheck. At the same time, some accumulate huge sums in their bank deposits, and the total amount of household savings for a year increased by BGN 7 billion to BGN 74.7 billion, according to BNB data at the end of June.
In Bulgaria, 23% of people do not have any money for emergencies. And another 12% say they have money to get them through a few weeks, but less than a month. This is shown by the results of a study by Eurobarometer, which conducts surveys in EU countries on behalf of the European Parliament.
It turns out that one in three (35%) has no savings to live on for at least one month. On average for EU countries, only 25% of people have no savings for a month. When asked how long they could continue to cover their living expenses without borrowing money or moving to another home if they lost their main source of income, one-third of respondents (33%) of residents of countries from The EU responds that they have money for at least six months. In Bulgaria, only 24% of respondents have savings for more than six months. Bulgaria is among the EU countries with the smallest share of people who can live comfortably with their savings for at least half a year. Only Greece, Croatia, Romania, Hungary and Latvia are worse than us in this respect.
The situation regarding the financial prospects of the Bulgarians is even worse. The majority of EU respondents feel “not very confident” (32%) or “not at all confident” (22%) that they will have enough money to live comfortably in their post-retirement years. Thus, a total of 55% of EU countries do not feel confident that they will have enough money after retirement. In Bulgaria, the share of those people who think that they will not have enough money in retirement is 69%. In our country, only 6% think that the money will be completely enough for them. These results are also confirmed by BNB data, according to which deposits with large amounts in them are few in number.
Eurobarometer research shows that there is still much to be desired in terms of financial literacy in EU countries. The results show that 18% of EU citizens show a high level of financial literacy, 64% an average level, and the remaining 18% a low level. In Bulgaria, only 15% have great financial knowledge, and 20% have rather weak knowledge about money.
There are large differences between Member States in terms of financial literacy. In just four Member States, more than a quarter of people score high on financial literacy – the Netherlands, Sweden, Denmark and Slovenia. This means that out of five finance questions they answered at least four correctly. The results show the need for financial education to be targeted in particular at women, younger people, people with lower incomes and with a lower level of general education, who are usually less financially literate than others, Eurobarometer experts comment.
Most respondents (65%) understand the impact of inflation and its potential impact on purchasing power. But only 45% of people understand how compound interest works, despite the concept’s importance to managing personal finances and achieving long-term savings goals.
In terms of understanding investment risks, 66% of respondents correctly associate higher returns with greater risks, while only 56% correctly believe that investing in a diverse set of companies is likely to be less risky than investing in just one company. Only 20% of respondents in EU countries show an understanding of how interest rates affect bond prices.
Savings in deposits with the largest amounts grow the most
Five new millionaires every week
They close deposits with small amounts
Every week, five more people appear in the country who can boast that they have more than BGN 1 million on deposit in a bank. By the end of June, the deposits of citizens with over BGN 1 million in them grew to a record 1,324. In a year, their number increased by 282, or by 27.1%, according to BNB data.
It is in these millionaire deposits that the accumulated funds grow the most. For a year, the total amount of savings in the millionaire deposits of citizens increased by BGN 850 million, or by over 30 percent, and exceeded BGN 3.6 billion. At the same time, people with small deposits with sums of up to BGN 5,000 in them are forced to close them to cover their daily expenses.
There is an increase in savings in all groups of deposits with amounts over BGN 5,000 in them. But the more money there is in the deposits, the more the savings in them grow, or as people say “money goes to money”.
The amounts in the deposits of citizens with sums over BGN 1 million in them increased the most. Deposits with amounts between BGN 200,000 and 500,000 are in second place in terms of growth, with the total amount of savings in them increasing by 21.5% per year. There are only 19,150 deposits of citizens with such amounts in the country. Household deposits with amounts between BGN 500,000 and BGN 1 million remain in third place. Over the year, the funds in them increased by 20.5%, and the total number of these deposits increased by 21% and reached 2,718.
It turns out that the total number of deposits of citizens with sums over BGN 200 thousand in them is only 23,192. Of course, many people may have several deposits with more than BGN 200 thousand in them. But in general, people with large sums in their deposits are a small proportion of the country’s population.
In the case of citizens’ deposits with amounts between BGN 100,000 and BGN 200,000, the amounts accumulated in them increased by 10.7% per year. The growth was the smallest in the deposits of citizens with amounts between BGN 5,000 and 10,000. For a year, the accumulated savings in them increased by only 2.4%.
In the case of smaller deposits, there is a reduction in both their number and the total amount in them.
As a result, the total number of household deposits decreased by over 71,000 per year, but the total amount of household savings increased by BGN 7 billion.
In other EU countries they save more
Bulgarians are stuck in consumer loans
11% have cryptocurrency
Every third person in Bulgaria has a consumer loan, but very few people invest in funds, shares or bonds.
While in other EU countries people use various financial instruments to save, Bulgarians are mired in debt. In Bulgaria, nearly every third (31%) has a consumer loan, according to Eurobarometer research. As a matter of fact, many people have several consumer or quick loans.
At the same time, on average for EU countries, only 14% of people, or more than twice as many as us, have consumer loans. The reason for this is that in most EU countries people’s wages are enough to cover their current needs and they don’t have to take out a loan to replace their fridge. But in Bulgaria, a large number of people do not have money set aside for unforeseen situations, or the so-called “emergency fund”.
The lack of sufficient income prevents most Bulgarians from investing in the purchase of a home, regardless of the fact that they want to live in a nicer home. Despite the huge growth of housing lending in recent years, in our country only 9% of respondents have mortgage loans, compared to an average of 20% for EU countries. In comparison, for example, in Germany 17% of people have a mortgage and only 10% have a consumer loan.
The level of saving significantly distinguishes Bulgarians from other residents of the EU countries. On average for the countries of the Community, about a quarter of the respondents (24%) answered that they had or in the last two years had some investment product – shares of funds, shares or bonds. In Bulgaria, only 9% of people have such investments, and in Germany the share of these people is 33%. At the same time, Bulgarians continue to look for a quick profit with investments in riskier assets. In Bulgaria, 11% of respondents have cryptocurrency, compared to an average of only 6% for residents of EU countries.
We are very different from most EU countries in terms of Life insurance. In Bulgaria, only 17% have such insurance, compared to an average of 31% for EU countries.
Most carefully consider purchases
There is no consensus regarding banks
We use mobile banking
75 percent of people in Bulgaria feel comfortable using online banking or mobile payments.
People in the country, and in general in the EU countries, have quite opposite opinions regarding banks and other financial institutions. In Bulgaria, 44% trust investment advice received from a bank, insurer or financial consultant. And another 44% do not think that the boards of financial institutions are in their best interest, according to the Eurobarometer survey.
In terms of trust in financial institutions, Bulgaria does not differ much from the average level for EU countries. On average for the member states, 38% of respondents trust investment advice, and 44% distrust financial advice. The level of trust in councils varies widely across Member States. The citizens of Finland (59%), the Czech Republic (54%), and Denmark (47%) trust financial advice the most, while the citizens of Cyprus (only 20% trust), Greece (21%) ) and Latvia (24%).
Despite the fact that most people are unfamiliar with financial terms, most carefully consider whether or not to buy something. About nine out of ten respondents in the EU agree with the statement that before buying something, they consider whether they can afford it (51% “strongly agree” and 41% “somewhat agree” with this statement). A similar proportion of respondents agree that they monitor and monitor their spending (49% “strongly agree” and 43% “somewhat agree”). About seven out of ten respondents agree that they set long-term financial goals and strive to achieve them (21% “strongly agree” with the statement and 50% “somewhat agree”).
Around three-quarters of respondents in the EU say they feel comfortable using digital financial services, such as online banking or mobile payments. 36% answered that they felt “very comfortable” and 41% “somewhat comfortable”. The share of these people is over 60% in all Member States and is highest in Finland (95%). The situation in Bulgaria is like the average level for EU countries – more than 75 percent of people feel comfortable using online banking or mobile payments.
5,346 are company deposits with over BGN 1 million.
The companies with the most money are accumulating bundles
The most are the deposits with up to BGN 1,000.
The situation with the savings of companies is similar to that of households. The companies with the most cash in the banks grow their savings the fastest. In the country, there are only 5,346 deposits of non-financial enterprises with sums exceeding BGN 1 million in them, BNB data show.
For a year, the number of company millionaire deposits increased by 28.5%, and the total amount in them increased by 27.4%, or by over BGN 5.1 billion. Thus, the total amount of funds in the largest company deposits exceeds 23 BGN .8 billion, which is 57.8% of all business savings in the country.
For the year, the total amount of company savings increased by BGN 5.74 billion. Of these, BGN 5.13 billion were added to deposits with amounts exceeding BGN 1 million in them. It turns out that the companies with the most money continue to accumulate the most bundles in the banks. While for the rest of the companies, the increase in savings is significantly less.
Company deposits with amounts up to BGN 1,000 are the most – over 305,000. Over the past year, their number has decreased, as has the smallest deposits of citizens. But there is an increase in company deposits with amounts over BGN 1,000.
2023-08-11 06:56:06
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