Financial Fragility Among Cypriots Highlighted in Recent Study
In a revealing study conducted by the University of Cyprus’ Economics Research Centre (CypERC), it was found that a significant portion of the Cypriot population is financially fragile. The study, which focused on the impact of financial literacy on financial resilience during the challenging times of the Covid-19 pandemic, surveyed 840 individuals aged between 25 and 64. The term “financially fragile” refers to those who are unable to meet an unexpected financial need in any given month without resorting to borrowing or seeking financial help.
Alarmingly, the research indicated that approximately 60% of participants do not possess sufficient savings to cover living expenses for three months in the event of losing their primary income source. This lack of financial security was most prevalent among young people, the unemployed, low-income households, and the elderly.
Moreover, the study shed light on the correlation between financial knowledge and the ability to navigate through economic downturns. Less than 40% of Cypriots were found to have a “good level” of financial understanding, which has had a direct impact on their capacity to manage the fiscal challenges brought on by the pandemic. While higher education and income levels did contribute to better financial preparedness, CypERC emphasized that financial literacy is crucial for effective financial management.
The researchers observed that individuals with ample resources but limited financial knowledge were less inclined to save for emergencies. This could be attributed to a lack of understanding of saving strategies or past financial errors. As a result, CypERC advocates for policy measures aimed at enhancing financial literacy, echoing findings from several studies which suggest that financial education leads to increased saving behavior and future planning.
Highlighting recommendations by the Organisation for Economic Cooperation and Development (OECD), CypERC pointed out the importance of starting financial education early. This approach is intended to instill positive habits and attitudes, as well as impart essential financial knowledge and skills before they become necessary. The study concluded with a call to action for Cyprus’ youth, emphasizing the need for such education to bolster their financial resilience.
