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CFA Romania: Only 4 out of 10 Romanians are financially independent
Only 4 out of 10 Romanians are financially independent, which means they are ready to cope with unexpected expenses, a period without incomes or a retirement period. Only 3 out of 10 Romanians save money on a monthly basis, while a third of Romanians close to retirement age have debts equal or higher than active stock, according to financial analysts from CFA Romania Association who applied questionnaires that measured the degree of financial independence with Romanians.
13% of respondents have an average degree of financial independence, and only 44% can be considered financially independent. That means they can manage most unforeseen expenses and are investing for retirement time.
Analysts say that 43% of Romanians call on friends, family or the state for aid.
The CFA Romania questionnaire is part of Generation I initiative and had in view to measure the degree of financial independence, defined as the possibility of being able to manage unforeseen expenses, the loss of reduction of an income source (salary, pension, etc) or the possibility to add to pension from personal incomes.
The salary or pension are the only income source for about two thirds of Romanians. Thus, only 17% of respondents have multiple income sources, thus having a diversification of income sources. For 64% of them, the only income source is the salary or pension, while 6% have no monthly income source.
A third of Romanians close to retirement age have debts equal to or higher than active stock.“In point of wealth level, 44% of respondents from +25 year old category have debts equal or higher than the level of active stock and only 25% have net active stock covering at least 3 months of expenses. Results for the +55 age group are more alarming, since 35% of respondents have debts equal or higher than active stock. These persons depend on pensions and re extremely vulnerable to possible changes of living standard or interest rate levels,” they added.
Also, only 3 out of 10 Romanians make monthly savings. “As for saving behavior, 29% of respondents do not save at all from monthly incomes. 15% would like to do it, but monthly expenses are higher than income level, while 14% could save but do not. At the opposite pole 29% of respondents save over 20% of monthly incomes,” the questionnaire shows.
Although they do not save, more than half of respondents (60%) declare they monitor their monthly budget. On the other hand, about a quarter declare they do not plan or follow their budgets regularly.
When it comes to the decision to invest, only 7% od respondents would contact a specialist to discuss important decisions. Respondents declared they prefer to make decisions on their own, benefiting from previous experience (35%) or want to learn alone (32%). Bank deposits (33%) and real estate active stock (25%) are the main active stock used by respondents for investments.
CFA Romania Association is an organization of professional investors in Romania and one of the over 159 societies members of CFA Institute. At present, the association has 250 members, holders of the Chartered Financial Analyst title.