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At Questia Group, Mondays bring fresh results of our latest studies. This Monday, we are focusing on saving and spending habits, as we just said goodbye to Black Friday and are gradually welcoming winter holidays.

The research was made through an online survey on our platform www.questia.ro, covering 1,510 respondents, with a plus or minus 3% margin of error. The online survey was active between 16 and 18 November 2016.

Our research shows that when expenses exceed monthly incomes, Romanians generally use money set aside (29.5%), borrow money from family members (20.9%) or from friends (12.3%). A 19% of the respondents are more cautious and have their incomes in line with their expenditures. A small percent of 6.4% admit to making an overdraft or use short-term loans from banks (4.2%) when in difficulty.

 expenses exceed monthly incomes

There are numerous factors that affect consumption and saving habits. Recently, new types of consumers and consumption habits have emerged, triggered both by macroeconomic factors (the global financial crisis in 2009, country-specific socio-economic and political factors) and individual ones.

Our study reveals individual habits of spending and saving. But individual factors are of course triggered by more general ones. For instance, many economic and demographic variables have been identified as saving determinants : income (temporary/permanent), uncertainty (political instability), rates of return (interest rate), domestic and foreign borrowing constraints, inflation, fiscal policy, the pension system, demographics (old or young age, urbanization). In this sense, both individual particularities of countries (economic development level, financial education, the market sector) or group characteristics (such as the type of income i.e. regular vs. transitory income; type of employment, consumer goods, age, education etc.) are key aspects that researchers consider when studying economic behaviors.

In our research, trends in savings show that Romanians put money aside for emergency situations (40.5%), to have more money in the future (15.0%) or for future holidays (10.1%) and future purchases (8.8%).

trends in savings

Saving or not managing to save money are highly dependent on personal income, present wealth or past negative effects (see Moraru and Baca 2015). Other factors can be what economists referred to as the “ratchet effect”. This effect refers to preventing the consumption level to drop significantly when the income decreases, as well as the dependence of consumption on the highest level of income previously reached. (If interested, see some early economic explanations of other effects discussed by Duesenberry , Modigliani, Brown).

However, 23.4 % of respondents admit to not managing to save money up until now. This finding is consistent with what other researchers have pointed out – the fact that households in Romania often spend more than they earn, resulting in negative saving rates. This stems from the fact that prices in Romania represent two-thirds of the average at the level of EU, thus making living standards more expensive and making it harder for the average citizen to save money. Find out more about such data by considering the purchasing power parities (PPP), which are indicators of price level differences referring to how many currency units a particular quantity of goods and services costs in different countries. Compare the level of the PPP in Romania to other EU countries here.

Next, we focused a bit on attitudes towards long-term saving, spending, and money in general.

long term saving and spending

Findings point to the fact that 72.6% of the respondents totally agree that it is important to save money for rainy days. Also, 46.6% are interested in different ways to save money. This is valid for both spenders and savers. Yet, when it comes to spending habits, 35% of the respondents rather agree and 28.1 % totally agree that from time to time they prefer to be spontaneous and impulsive. Also, 29.3% tend to spend money as soon as they get them, while 26.9% rather agree and 11.4% totally agree that money is for spending, not saving. These results provide an overview, since some are more cautious, while others prefer to live in the moment and worry later. Some studies found out that brain chemistry plays an enormous role in people’s financial habits. See this study here.

As to attitudes towards money in general, 39.6% of the respondents totally agree and 30.2% rather agree that everyone should have a bank account. However, respondents tend to be rather conservative considering the way money exist. In this manner, 34.8% rather disagree and 27.2% totally disagree with the idea that money should not be cash, just credit/debit cards. This is consistent with the fact that the penetration rate of credit cards in Romania amounts to 0.9 cards per capita, compared to the European average of 1.5 cards per capita.

Stay close for more of our studies on consumption habits, attitudes towards spending and other insightful ideas from the banking industry. Express your opinions in the comment section below and let us know what type of saving and spending habits you have!