Many of our compatriots do not know how to manage their finances and prefer to "freeze" their savings in long-term deposits for "rainy days" with unfavourable interest rates and even losses.

Analysts attribute the growing ignorance about managing one’s personal finances among Bulgaria’s older population to the "social heritage" when there was no market economy and people simply kept their modest savings in the bank or at home, in the so-called "jarbank". But there is another reason, too. Excessive caution and distrust of the financial markets and the banking system in Bulgaria is a consequence of the dramatic bankruptcies of the financial pyramids at the dawn of democracy here. According to unofficial data, at least BGN 10 billion have sunk into financial fraud since the beginning of the transition, leaving more than 200,000 Bulgarians bankrupt. And the crooks, called "pharaohs," are to this day freely continuing their lives, undisturbed by justice. Three decades later, people remain skeptical.

According to financial consultant Emil Ivanov, the uncertainty surrounding the coronavirus and Bulgaria’s forthcoming accession to the eurozone, related to the "big money printing", which will increase inflation, is currently on the agenda. People feel afraid for their savings and do not know what to do.

The problem is that in recent years interest rates on deposits in banks are almost zero, and some have even stopped providing the deposit option, which limits customers. At the same time, inflation is going up. According to Ivanov, young people are more adequate to the situation. "They easily navigate the markets, i.e. they invest in large funds, in stocks, in other financial instruments, such as bonds, and this allows them to have more flexibility for their money ", the financier claims and adds:

"The worst thing Bulgarians can do right now is to cling to their savings, put them in the bank and have them at 3-5% interest rate in the face of inflation - this will severely damage their finances. Imagine some BGN 10,000 saved. In 1 year they will be BGN 9,500, and at the same time the goods will have risen in price by 5%. In this situation, we recommend action - either in investment, or by increasing financial literacy, with the opportunity to earn more. But just waiting and complaining is certainly not an option right now. "

Along with the forthcoming accession of Bulgaria to the Eurozone, even greater inflation and a jump in prices are expected. "In the first 2-3 years, in countries like Slovakia, Latvia, Lithuania, Estonia, which have gone this way, inflation has jumped over 10%. In case of incorrect planning of personal finances, such a tendency could absorb a significant part of the savings of Bulgarians, Emil Ivanov fears and adds:

"I strongly believe that in the next 10-15 years the Eurozone would be extremely fruitful, as it will open economic roads for Bulgaria, will bring investors and opportunities for more business. Ultimately, this will lead to higher incomes. But in the short run, if no action is taken, this process could lead to the impoverishment of the less active part of the Bulgarian population. What I advise people is that in this situation you do not need to be sick to seek a doctor. In the same way, you do not need to be in financial difficulties in order to look for a financial consultant," Emil Ivanov says in conclusion.

English Rositsa Petkova