A sociological survey conducted by the Trend agency and commissioned by the Expert Club for Economics and Politics (EKIP) reveals that 73% of Bulgarians feel their savings have diminished due to high inflation since mid-2021.
Max Baklayan, an investment expert at EKIP, explained that the proper approach to finances was to prioritize saving for future needs before spending on immediate desires. Unfortunately, many Bulgarians only save after fulfilling all current expenses and wants. He noted that people often saved “for rainy days” or in preparation for larger short-term purchases.
Baklayan suggested thinking of saving as a “tax you pay to your future self”. It doesn’t require a drastic portion of one’s income, but rather instills a mindset of spending less than one earns. He indicated that saving was a behavior developed over time, with many individuals beginning to save between the ages of 40 and 70, after which they often shifted their focus to immediate needs.
Stoyan Panchev, an economist from EKIP, pointed out that saving in a bank had become increasingly ineffective in combating inflation due to negative real interest rates.
“Even if you leave your money in a bank, it still reduces the value of your savings,” he remarked.
Panchev also highlighted a significant inequality in savings opportunities within Bulgaria, as noted in an EC report.
Baklayan emphasized that waiting until one was in a tight financial situation to start saving was misguided.
He stated: “There is a great hunger for labor in Bulgaria, especially for skilled workers, and the potential for income growth is quite substantial.”
He suggested that the easiest luxuries to forgo included branded items, expensive electronics and dining out.
When it comes to saving, Baklayan urged a shift in perspective, suggesting that individuals should see savings as a means to future prosperity rather than a deprivation of enjoyment.
He pointed out: “It may turn out that you live much better by saving.”
The increasing rate of loans in Bulgaria has been mirrored by rising inflation, according to Panchev, who identifies the growth of mortgage loans as particularly concerning. He highlighted that approximately 25% of Bulgarians were taking out quick loans, while just over 20% were managing to save. This creates a division in society between those focused on consumption beyond their earnings and those committed to saving for the future. (Novinite)