Czechs Facing Financial Strain as 25% Struggle to Support Families Amid Debt

The financial situation of Czechs is getting worse. One in four has already experienced a situation where they lacked money for everyday life.

However, Czechs do not lack financial self-confidence and they value their knowledge of the world of money.

The number of those who have experienced financial difficulties has risen by more than six percentage points year-on-year. While last year 54 per cent of people dealt with financial discomfort, today it is almost 60 per cent.

This information was gathered from a global survey of 500 participants, ages 18 to 75, that Kantar carried out on behalf of the International Personal Finance group.

The increase is more noticeable when there aren’t enough finances to cover living expenses, when income isn’t enough, or when loans are denied.

At least once, one-fourth of Czechs have struggled with having insufficient money to support their family. Comparing this to last year’s one-fifth figure shows a huge increase. The proportion of people in this age group who experience such situations has increased from 20% to 34% in only one year.

In addition, a higher number of people have reported having their loan applications rejected by banks (up 30%) or other lenders (up 85%) than they did the year before. Cases of prolonged unemployment were noted by 16% of respondents, up nearly 25% from the previous year.

The director of credit risk at Provident, Lubomír Brůha, observes that the number of loan applications is on the rise. However, the difficulties in managing several debt payments, particularly in hard times, can raise your chance of running into financial trouble. To avoid undue risk exposure, loan applicants’ ability to repay loans is carefully examined.

Jiří Hluch, the founder of the fintech company Frenkee, supports this finding by drawing attention to the growing number of consolidation requests, which frequently result from enormous debts incurred for extravagant purchases like opulent vacations or non-essential consumer goods.

Czechs who find themselves entangled in the debt spiral frequently turn to family for aid, followed by more distant relatives and friends. However, a reduced number are seeking assistance from the state.

Despite the growing financial difficulties, Czechs remain confident in their financial knowledge and literacy. This confidence has surged over the last three years, with almost 62 percent feeling confident in their financial acumen. Nonetheless, the correlation between self-assurance and actual financial knowledge is not always strong.

This prevailing situation underlines the need for improved financial literacy education to prevent unnecessary borrowing and high-interest financial pitfalls.