Oct 17, 2021
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Russia is covered by an epidemic of personal finance

Russia is covered by an epidemic of personal finance

Photo: Stanislav Krasilnikov / TASS

From time to time, people start to stock up on something. Sometimes feverishly: buckwheat, matches and toilet paper; and sometimes cleverly: real estate, a car or large appliances for the home. At the beginning of the pandemic, the first was observed. Now, although Covid-19-20-21 is not over yet, we seem to have got used to it. Some, those who can afford it, are thinking about the second – long-term accumulation of money, which is called for a rainy day.

There are those who save simply “for the love of art.” They do not set specific goals for themselves, such as an apartment-car-vacation, although perhaps, deep down, they mean to acquire something. But 23% of those surveyed save money just to have some kind of “safety cushion”. These are the results of a study by the investment company Anderida Financial Group. Reported by MIA “Russia Today”.

There were fewer people who saved money with all their might, about 20%. Last year, the people had not yet realized it, many were spending quietly. Now – they are cutting costs in order to restore a pleasant weight in the egg-boxes. This is especially true for those on whom loans are hanging – it is fraught with sudden firing. How, then, to pay the accrued interest?

Expert of the Academy of Finance and Investment Management Alexey Krichevsky reminds that every sixth economically active citizen receives loans from microfinance organizations:

– The indicator of the debt burden of one third of bank borrowers is above 80%. An increase in the standard of living of people is not yet expected – due to inflation.

Last year, the population was actually busy surviving – in the spring, and solving financial issues – in the summer and autumn, in order to somehow cope with the spring expenses in the lockdown. The savings model of accumulation for Russians is, on the whole, logical. But it is not always justified: all the savings that people now have, have depreciated already this year by at least 10% and will depreciate by the same amount next year. The inflationary spiral is not planning to disappear yet – there are too large supply and production gaps around the world.

The restoration of the number of citizens engaged in saving for large purchases is a sign that, to a certain extent, the question of survival has disappeared from some Russians. That is, it turned out to raise my head a little and think about the future, albeit not with as many people as we would like. Another question is that if we compare the expenses of people with the growth of their median salaries, then expenses from September to October increased by 20%, and salaries – only by 7%. Without growth in real incomes of the population and stabilization of world inflation, progress is impossible. Even those who have the ability to procrastinate …

In general, these indicators vary from month to month and from year to year. I remember 2015, when, due to a drop in income, Russians also began to save. I remember that they began to spend less and buy currency more often. Then, I remember, they started talking that the poor were getting poorer and the rich getting richer.

Denis Khuziakhmetov, Head of the White Owl Legal Board recalls that the access of citizens to loans has caused a natural need to obtain “easy” money to meet every minute needs:

– Let’s remember the saying: “We take strangers, give ours.” Credit cannot be cheap. Those who have the ability to save something are saving up. The coronavirus pandemic also played a role – 2020 was marked by a large number of loan refusals. Banks did not want to take risks by issuing loans that could become uncollectible. During this period, many borrowers lost their jobs, became bankrupt …

On these autumn days, about 18% of respondents are saving money to buy real estate. The number of such people increased by 3% over the past year. The pandemic has forced many to reconsider their attitude towards suburban real estate. Those who did not have time to buy a dacha are preparing to do so in order to escape there from the impending “plague”.

Sociologist Sergei Talanov believes that due to the crisis processes in the global economy, the imposition of sanctions by a number of countries against Russia and a number of other reasons, the level and quality of life of the population has been falling in recent years:

– From the point of view of sociology, the higher the income, the higher the costs for better food, leisure, clothing etc. For example, for low-resource groups, more than 50% of expenses are spent on food. Therefore, with low incomes, people switch to the so-called resource mode or economy mode. With a high likelihood of currency devaluation and high inflation, most are looking for ways to keep what they have. Everyone understands that inflation eats up all personal reserves of households. In these conditions, it is necessary to improve the quality of life of the population: reduce inflation, increase wages and labor productivity. Perhaps, for low-resource groups, introduce food cards and an unconditional basic income …

Yes, it is unlikely that these low-resource citizens save up to buy a car. Be that as it may, such 14% against 9% a year earlier. Some “dream of Paris again”. They hadn’t been there yet, but they were already dreaming. And some – about the car. After all, dreaming is not harmful, but even useful. The growth in the number of dreamers is associated with the fear of further rise in the price of cars. I would like to do without loans.

Practicing investor, entrepreneur, expert in the formation of passive income Leonid Voroshilov believes that “cheap” loans and preferential mortgages pushed people to an increased debt burden:

– Over the past year, when prices skyrocketed, and the Central Bank’s refinancing rate went down, citizens ran to make purchases, often with credit funds. In my opinion, this is a time bomb. I believe that the credit load should not exceed 30% of income. In addition, you must have a “safety cushion” for at least six months. Uncontrolled debt load can threaten catastrophe and default of certain individuals. For those who yearn for cheap money and are looking for easy money making opportunities, I advise you to remember that greed breeds poverty. It is better to correctly calculate the risks and opportunities – your own and the market.

But I really want to buy a plasma and a refrigerator. 12% of our people are planning to buy large electronics and household appliances. Some want to make repairs – there are 8% of them among us. 5% of respondents save money for education, medical services and travel. 10% – save money for something else. For example, shopping in anticipation of the birth of a child.

Attorney at law, partner of the Moscow bar association “Status Group” Ilya Sklyar I am sure that such statistics do not at all indicate the transition to a savings model:

– Rather, we are talking about the fact that the rise in prices and the decline in the availability of credit are forcing many Russians to save up for consumer needs. Even for the purchase of housing on a mortgage, an initial payment of at least 10% is required, and apartment prices in the largest cities are becoming less and less affordable for an average Russian citizen. The same applies to a car, and even smaller purchases such as furniture and household appliances.
As follows from the recent report of the Central Bank, the level of the credit burden of Russians continues to grow, and its quality continues to fall. Now 62% of borrowers spend more than half of their income on servicing consumer loans. And the number of citizens declared bankrupt has been steadily growing since last year – in 9 months of 2021, “year on year”, almost doubled.

Therefore, the “savings model” in practice loses out to the desire to “grab until the price has risen,” and it does not matter for whose money: accumulated or borrowed.
Buy or save? Alas, the real profitability of most deposits in Russia by the end of the year will be negative or close to zero. Realizing this, people will soon start spending their savings, rather than saving.

Chairman of the Board of the Investment Capital consumer cooperative Andrey Karedin, believes that Russians have always saved up for a rainy day:

– Most often, deposits are opened by Russians of pre-retirement age and pensioners, who have been saving their savings for years and kept them mainly in banks. But every year the interest there went down and down. The people still endured until the market collapsed in 2020-2021 and a record was set for the outflow of ruble and foreign currency savings from banks, as well as a record for the minimum interest rates on deposits. As a result, people took away their “airbags” and not only pensioners. They began to spend them to maintain the current standard of living, especially since the pandemic is in the yard and many of them have a very bad financial situation.

Inflation accelerated, in September 2021 the price growth reached 7.40% in annual terms. This is the maximum since June 2016. With incomes it became very bad, consumer demand fell. Banks began to offer everyone cheap loans and mortgages. Every Russian naturally decides for himself what to do. Someone decided to take advantage of such “rare” interest rates and decided to go for broke, someone added their savings to the credit funds, someone still lives on credit funds until better times.

A new record has been broken again, the debt load of Russians has reached the maximum in history. Even the Central Bank doesn’t like it. On his initiative, a bill was introduced to the State Duma to limit the volume of issuance of certain types of loans. Of course, in the case when many have three or four loans, there is concern about the future of their service. Therefore, it is not surprising that many thought about it.

Chairman of the Union of Consumers of the Russian Federation Petr Shelishch doubts the objectivity of the findings of this study based on population surveys:

– The data of the Bank of Russia for January – July 2021 do not confirm these conclusions. During this period, funds on deposits of individuals (where they are usually saved) decreased by 1.2 trillion rubles. Although at the same time the balances of individuals in current accounts increased by 1 trillion, this money is intended for current expenses, and not for accumulation. If some part of Russians rushed to save up – some for a car or an apartment, and some for a “rainy day”, the risks of which have increased significantly, then others, and there are more of them, rushed for loans in order to have time to buy something needed before the coming of such a day.

In a situation of such a rapid rise in prices, as now, it is much more reasonable than saving. Those who are saving up to buy a house or a car should know that in just 9 months of this year, prices for many basic building materials have grown by one and a half times or more, for cars by an average of 11% (imported) and 13% (domestic). Therefore, it does not surprise me that Russians took out cash loans in August for a total of 612 billion rubles – a record amount of funds that borrowers in this segment received in one month, in the entire history of the Russian banking sector. Compared to August 2020, this is more by 32%, from August 2019 – by 40%.

I believe that for this whole year, the total amount of bank loans to individuals will grow from 20 trillion to 26 trillion rubles. Additional trillions go to the consumer market, where goods and services have not been added, accelerating inflation. It is profitable for the banks – it has not yet brought to a crisis the non-payments of borrowers, whose incomes cannot grow if production does not grow. It is harmful and dangerous for society. And when the individually reasonable and lawful behavior of citizens becomes socially dangerous, it is worth thinking about the foundations of both state policy and public morality.

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