Family budget in times of crisis – priorities and restrictions

published on 1/14/10 12:50 PM

The global financial crisis has changed the way of life of many people. The macabre forecasts; the still unclear end of the crisis; the threat of job cuts; unemployment and low incomes have all forced Bulgarians to cut back their family and personal budgets. At the same time, people never stop lying up for rainy days.
The number of deposits in banks is on the rise and this comes as a result of increased trust in the country’s banking system and higher interest rates with which banks compete in attracting financial resources. According to Lachezar Bogdanov from Industry Watch, by the end of summer 2009, Bulgarian had deposited some EUR 12 billion euro. Higher interest rates are the reason Bulgarians seek to increase their financial assets. This way, the quest for higher interest rates gave birth to the so-called ‘banking tourism’ – transferring deposits from one bank to another with better rates. At the same time, a lot of families have made serious cuts to their budgets. Expenses are cut, cheaper goods are purchased and low-price stores are attended. According to experts, the crisis is least felt in the capital Sofia while in small towns, its impact is gravest and there people resort to home-made production of food. The situation is gravest with pensioners. What do Bulgarians think about the crisis and its impact? A middle-aged engineer confesses that his family budget experiences great strains. This is what he says:

“It is a very tough question,” he sighs. “There are so many things we’ve stopped buying – shoes, clothes and other things our household could go without. To tell you frankly, I hope we won’t have to cut on the food. We work whatever to scramble a living. Both my wife and I are engineers but she had to re-qualify and become a teacher. On top of that she takes care of elderly people.”

This is what a retired lawyer shares with Radio Bulgaria:

“We are trying to cut back on expenses. First come telephone conversations, then electricity, followed by central heating. During Christmas and New Year holidays we bought presents only for the closest family circle – my granddaughters, my son and my daughter-in-law. I am a pensioner but I have to work extra as a lawyer to have a decent income. I am 75 years-old and I should take some rest by that age. I started working back in 1959 – some 50 years ago!

Most Bulgarians have postponed major purchases such as cars, houses or exotic vacations for better days. For now they’ve concentrated on the basics until it becomes clear when the crisis will end. Medical expenses however have not been cut. So is the case with expenses for education. A lot of Bulgarians, especially young ones, have started studying again, something unseen in recent years. After the banks tightened the conditions for loans, many Bulgarians resorted to cutting expenses. An elderly lady with an intellectual appearance admits to Radio Bulgaria that her family has scarcely cut back on expenses. “From time to time we go to the cinema or concert,” she says and adds:

“The elderly people today know how to spare money. The youth cannot do that. They want everything right away. One should know what is important.”

She thinks that a lot of people will learn their lessons from the crisis. The youth too will learn to cut down expenses. A recent survey of the Bulgarian Commerce Chamber reveals that the purchase of clothes has dropped by 21% and so is the case with other products. The sales of luxury perfumes has not dropped, the same survey shows.

English version: Delian Zahariev

По публикацията работи: Milka Dimitrova

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