Half of Czechs can't make ends meet due to rising prices

A survey shows that many people are having to dip into their savings or make significant spending cuts.

Expats.cz Staff

Written by Expats.cz Staff Published on 07.11.2022 10:45:00 (updated on 07.11.2022) Reading time: 2 minutes

Less than half of Czech households manage to meet all their expenses from their regular salary and a third of people have to dip into their savings. When people borrow money, it is most often from family or friends, according to a STEM/Mark survey conducted for the finance company Home Credit.

The STEM/Mark survey was carried out online in mid-October throughout the Czech Republic on a sample of 506 people aged 18 to 64 years old.

Czechs increased their savings during the Covid pandemic, which brought shop closures, but inflation and higher energy costs reversed the trend. The situation is expected to grow worse in the coming months, news site Seznam Zprávy reported.

The current financial situation of Czech households

  • Able to save more than in the previous year: 13.83 percent
  • Staying even: 35.57 percent
  • Seeing savings dwindle: 33.40 percent
  • Savings at practically zero: 17.19 percent

The recommended amount of savings for financial security is between three and six times the necessary monthly expenses. This amount is unattainable for many households these days.

"Any amount of savings is positive. It is also important to get used to the fact that every month one should put some part of one's income aside," Home Credit ombudsman Miroslav Zborovský said, according to Seznam Zprávy.

Regular monthly expenses have increased for the majority of Czechs, with the largest amounts going to housing, food, and health aids. Some 85 percent of households say spending has increased, with 47.04 percent saying it is up significantly and 38.34 percent saying they spend a little more.

Growth in disposable income is lagging behind high inflation. According to the Czech Statistical Office, in the second quarter of 2022, real income – which compares wage increases to inflation – fell by 9.8 percent. Households can no longer buy what they used to with their income.

How are Czech households managing?

  • Managing from regular salary: 49.41 percent
  • Dipping into savings: 30.24 percent
  • Limiting expenses: 19.37 percent
  • Second job: 12.25 percent
  • Taking loans: 6.23 percent
  • New investments: 4.15 percent
  • Selling items: 2.57 percent

People who had to borrow money asked family or friends 71.88 percent of the time, approached banks 21.88 percent, and other financial institutions 25 percent of the time.

Two-thirds of people fear that the current situation will make repaying current loans problematic, with 23.93 percent “very worried” about loan repayment, while only 29.45 percent saying they were not concerned. Almost 6 percent of households are already running into problems with making their loan payments.

Those who find themselves in danger of defaulting should contact the credit provider as quickly as possible to find a solution, according to finance experts cited by Seznam Zprávy.

Are you able to make ends meet with your current salary?

Yes, I am able to pay my bills with my current salary. 56 %
No, I am struggling. 32 %
No, I am struggling and have had to dip into my savings. 12 %
182 readers voted on this poll. Voting is open
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