Rising prices and constant wages have recently led to a decline in savings behaviour in Germany. Persistent inflation is to blame.
Going to the supermarket has become a gauntlet for many consumers in 2023. Every cent is turned over twice and carefree shopping is no longer possible, especially for low-income earners and families. Likewise, mail from the electricity supplier was very likely to cause numerous panic attacks in private households last year. The bottom line is that everything has become more expensive.
For example, as Deutschlandfunk reports on its website, in 2022 the Federal Republic of Germany experienced the largest price increase since its reunification more than three decades ago. The reasons for this include the Corona pandemic, the war in Ukraine and the urgently needed energy transition. Due to the rising cost of living, Germans can no longer save some of their monthly salary as usual. More and more Germans are reporting that they simply have no money left to save. This assessment was recently officially confirmed by the Bundesbank. But where do the enormous price increases come from and what can savers do to continue to save something? We have compiled the most important information about inflation and its consequences for you.
No money to save: why is it?
This woman regularly puts money in the piggy bank. © IMAGO
Anyone who has followed the news of the last few months in the slightest knows that 2022 was marked by enormous inflation. Prices for food and electricity were sharply increased, which was felt not only in private households. One of the reasons for this was the Corona pandemic of recent years, which resulted in a slump in the international economy. Companies around the world were reaching their limits and were forced to raise their prices as a result. Meanwhile, wages and salaries remained largely unchanged. The start of the war in Ukraine in February 2022 also had a strong impact on inflation. Of course, when the European Union decided in May to reduce oil and gas imports from Russia by a total of 90 percent, energy prices rose sharply throughout the EU. However, the increased cost of fossil fuels is also related to the coming energy transition: In order to tackle the climate crisis, renewable energies are to be made more attractive, which drives up the prices of oil and gas.
No money to save: Developments in the financial market
As reported by the Frankfurter Allgemeine Zeitung, among others, the Bundesbank found an overall savings decline of no less than 2022 percent in a recent evaluation in 23. The last time there had been such a change in saving behaviour in Germany was between 1999 and 2000. While German private households had set aside a total of 2021 billion euros in 375, in 2022 it was only a total of 289 billion euros. However, a significant turnaround occurred in the summer of last year. Investments with a fixed term and corresponding interest rate, also known as fixed-term deposits, were of little interest to savers until July 2022. As a result of the interest rate hike by the European Central Bank (ECB), more and more private households relied on this asset class in the second half of the year. In general, there was an upward trend in the savings behaviour of Germans over the course of the year. Recently, private investors have also increasingly relied on bonds in the form of shares, funds and insurance. However, it remains to be seen whether the upward trend can be maintained in 2023.
No money to save: this is how you can accumulate money despite inflation
Although the situation on the international financial market seems to be easing more at the moment, there is unfortunately not much of it in many private households so far. Retail prices remain high and the cost of electricity and heating also continues to worry many consumers.
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In order not to wait in vain for relief from the state in terms of reserves, savers should therefore apply their own tips and tricks in 2023. There is a lot of advice on the net that private individuals can use to ensure that they can save something every month despite inflation. In most cases, however, this means that consumers have to rely on themselves. Sustainable consumption and five euros a week in the piggy bank are among the most common methods of continuing to save despite the increased cost of living. In order to spend less money in the longer term, Germans should also review their regular spending.
It may be possible to save on account fees or to get a larger sum out of the tax return. In 2023, there will also be some relief from the legislator, as payments for housing benefit, child benefit and insurance, for example, have been changed. Savers willing to take risks could also benefit from the improved situation on the stock market. In this case, however, you should always be well informed and seek professional advice.