Inflation Has Taught Hungarians to Plan

The recent record high inflation rate has made Hungarians more financially aware, with more and more of them trying to plan their finances, according to Provident research. In fact, change is needed: Hungarians are still finding it difficult to navigate the world of financial products compared with their European counterparts.

A recent survey by Provident Financial Ltd. says more than two-thirds of Hungarian families are now planning their finances – a growing proportion, but overall, it is still one of the most financially unaware societies.

A report by the company suggests that in theory, people can manage their finances easily: according to the latest Organisation for Economic Co-operation and Development (OECD) survey 2022-2023, 75% of Hungarian adults could correctly answer at least five out of seven questions on basic financial concepts (e.g. inflation, simple interest, compound interest, risk, diversification) – well above the 58% average for OECD countries. Only Hong Kong, Germany and Estonia scored better than Hungarians. However, a solid lexical basis is in vain: when it comes to concrete decisions on financial issues, i.e. applying theoretical knowledge to practical examples, Hungarians perform extremely poorly. Only the citizens of Cyprus and Yemen showed greater uncertainty in their financial decisions than those of Hungary, out of the nearly 40 countries (some of them outside OECD) surveyed. Hungary's 20% rate is a far cry from the OECD average of 52%.

It is true that the proportion of Hungarians who correctly calculate interest rates has increased by 80% compared to the OECD survey five years ago, but this still means that two out of three Hungarians do not understand how a deposit (or even a loan) in the bank grows.

This time, Provident Financial Ltd. looked at people's attitudes towards financial products in the nine countries where it is present as a financier, a narrower list than OECD countries. Hungarians also lagged behind in this comparison: although the proportion of people who say they are comfortable with finance has risen from 50.1% in 2023 to 52.3%, they are still a long way from the 61.4% average of the Provident survey in the Czech Republic, Poland, Romania, Estonia, Lithuania, Latvia, Mexico, Romania, Latvia and Australia – and the results of Hungarian men, who are much better at it than women, are also well below the average of the Provident survey.