Although 94 percent of Czechs consider themselves to be financially responsible, many still make painful mistakes in managing their personal finances. According to data from the Labour and Social Affairs Ministry many graduates who are unable to find jobs take out loans and set up small businesses, only to see them go bankrupt in a relatively short time. The age of people who file for insolvency has dropped from an average 35 to 28 years.
Financial experts say that while Czechs are creative and ready to take on the responsibility of running their own business poor financial planning often gets them into trouble. They are unable to create financial reserves and often take out several loans with no clear idea of how they are going to be repaid. Up to 75 percent of loan applicants are aged under 30.
Older people too suffer from a lack of financial education. The news site novinky.cz has compiled a list of the most frequent mistakes that people in their 40s make when it comes to managing their finances. According to the results of a survey a full third of Czechs in this age group say they are not saving up money for when they retire and are counting on living from state pensions. Experts say this is extremely risky since even now pensions do not make up even 50 percent of the average wage and according to European standards put those who have to rely on them live on the threshold of poverty. The average monthly pension in the Czech Republic is 11,266 crowns, the average wage is over 26,000. Another mistake is that those who do put money aside often use it in the event of need for whatever emergency comes up. Or else they take out a loan because they do not have adequate financial reserves in the event of unexpected expenditures. And finally, novinky.cz says they do not consider their own needs enough and spend generously to help their grown children at the expense of their own pension savings account.
The fact that two-fifths of Czechs live from hand to mouth and a quarter of households do not keep track of their expenditures shows how badly Czechs could do with financial literacy classes. The subject is not taught in elementary or secondary schools and efforts to introduce if have so far failed.