A recent report by Intrum has revealed a concerning financial trend among Finnish consumers: over half are spending as much as they earn, and 22% are living beyond their means. The European Consumer Payment Report highlights the financial challenges faced by consumers, with 75% of respondents in Finland admitting to either breaking even each month or overspending.
The average overspending among the 22% of Finns who exceed their income is about 226 euros, slightly lower than the European average of 232 euros. This situation is exacerbated by rising inflation and loan costs across Europe, leaving consumers with less disposable income. In Finland, 47% of consumers report having less money for discretionary spending than a year ago. To cope, 65% plan to cut back on unnecessary daily expenses, and 75% are more likely to seek the cheapest products or services than they were 12 months ago.
Reetta Lehessaari, head of collection services at Intrum, expresses concern over the financial pressures on consumers. "Households are facing tough decisions on how to allocate their funds. Delayed bill payments or the inability to pay at all is not only worrying for the households but also for the businesses relying on these payments," she says.
The report also sheds light on the lack of financial preparedness among Finnish consumers. Alarmingly, 31% have no savings for emergencies, significantly higher than the European average of 20%. However, there is a silver lining: 40% of Finns now have savings equivalent to at least two months' salary, up from 31% in 2022. This suggests a growing awareness and response to financial uncertainty, despite economic challenges.
Lehessaari emphasizes the importance of a financial buffer to avoid debt, especially in unexpected situations. "Multiple small loans taken out in emergencies can severely destabilize a household's financial situation over time. The more small loans there are, the higher the associated costs become," she cautions.
The European Consumer Payment Report 2023, conducted between July 19 and September 1, 2023, surveyed 20,000 consumers across 20 European countries. It aims to gather insights into the everyday lives of European consumers, their spending habits, and their ability to manage finances on a monthly basis.
This report highlights the financial struggles faced by many Finnish households and underscores the importance of prudent financial management and savings, especially in an uncertain economic climate.