From Nezavisimaya gazeta, Oct. 13, 2022, p. 1. Condensed text:

Some of the financial literacy principles instilled in Russians by the Finance Ministry and the Central Bank are now being stress-tested. This applies, for example, to the recommendation to plan ahead, whether for major purchases, children’s education or retirement. After the events of February [invasion of Ukraine; see Vol. 74, No. 8, pp. 9‑13 –Trans.] and especially September [partial mobilization; see Vol. 74, No. 38, pp. 3‑6], a recommendation like that may come off as divorced from reality. Unsurprisingly, surveys also show a split among Russians on this topic. Just over 50% of respondents are currently either not making any plans at all, or are only looking two to three months ahead. Just under half said they still have a long-term strategy. . . .

According to a survey of 1,200 Russians conducted between Sept. 26 and Oct. 5 by the online financial platform Webbankir, a majority of respondents (51.5%) said they don’t have long-term future plans. That includes both individuals who do not plan at all and those who plan for a maximum of two to three months ahead. At the same time, the remaining 48.5% of respondents still said they had a long-term strategy for life.

In addition, around 47% of respondents said they have a source of supplementary income aside from their main job. That would typically be a part-time job or a rental property. Some have bank deposits, or income from stocks and bonds. And almost the same number, about 46%, said they are looking for supplementary sources of income. Only 7% of those surveyed do not need additional income, and their current salary is enough.

About a quarter of people participating in the survey rate their financial situation as good. Just over a third consider it average. The largest share, however, is those who called their situation difficult, at over 40% of respondents.

Webbankir CEO Andrei Ponomaryov told NG that one can assume that people are currently less inclined to plan for the long term: “First of all, it has become much more difficult to do so. Second, there are many pressing tasks that need to be solved immediately.” At the same time, he pointed out that almost half of those surveyed still have long-term plans, which is cause for optimism.

The country’s economic history has kept Russians from getting in the habit of planning for anything decades into the future. And the younger generations, which may not have fully experienced the events of the ’90s, are now gaining their own experience, first from the lessons of the [COVID‑19] pandemic, which overwrote the life they were used to, and now also from the particular events of the current year. A hypothetical example: A young family plans to take out a mortgage today, and tomorrow the husband gets drafted.

As NG wrote previously [see Vol. 74, No. 39, pp. 3‑7], judging from polling results, the current anxiety level is not only higher than at the beginning of the special military operation, but also higher than what was recorded at the height of the pandemic. As of Sept. 25, 69% of the 1,500 individuals surveyed by the Public Opinion Foundation mentioned anxiety in the people around them.

Then, as of Oct. 2, the anxiety figure went even higher, with 70% of respondents now reporting it. And as demographers, among others, have warned, the fallout from the events of February and especially September could become one of Russia’s most serious demographic challenges in its modern history. Experts say the country faces the looming threat of a birth rate crisis.

Almost any plans for the future are currently getting a second look: financial plans, career plans, consumer plans or plans related to education, medical treatment, having kids or, say, moving. Some plans are swept aside; other decisions may, on the contrary, actually be made without planning, spontaneously, riding a wave of panic and fear.

“Long-term planning is not something Russians are known for. The devaluation of the ruble, wiped-out savings, crises – all this and so much more has affected many people’s financial well-being and changed their lives, and they have not forgotten this,” says Creditter CEO Igor Smirnov. “And now, even more so, making long-term plans is impossible. Too many factors affect businesses and people’s lives, many of which people cannot control.”

“The long-term household planning horizon for Russians is no more than five years. Even when we take out a 15-year mortgage, most of us plan to pay it off in no more than five years. This is due to the lack of lengthy periods of economic stability,” explained Mikhail Churakov, director of the Social Mechanics Center for Technologies and Research in the Humanities.

He thinks that the current situation with attitudes about planning was set into motion by the pandemic, already the fourth crisis since 1998. And according to the expert, as various research has shown, the situation has not changed significantly in the past three years: up to 30% of people do not plan at all, up to 30% plan things out for a maximum of a few months, and at best a quarter plan something for the next few years.

So uncertainty is growing, but we still cannot assert that people are not weighing their decisions at all. “Our research in September 2022 showed that, overall, an overwhelming majority (70%) of Russians plan for their futures in one way or another,” Andrei Milekhin, president of the Romir research holding company, told NG. “But that’s not just about long-term plans. Around 37% set goals both large and small, while 11% are planning for the short term.”

He says that every day, people are using planning to redistribute their budgets to optimize purchases, choose saving strategies and build savings. “For example, half of Russians note that they have been planning purchases more and reducing impulse buying in the past five months,” Milekhin explained.

“People have become much more financially literate. You can see that in borrower behavior,” Smirnov noted. “We see that during crises people take out fewer loans, loan totals come down, and borrowers try to settle their obligations on time to avoid additional expenses.”

And of course, we need to remember that any society has a lot of variation, Milekhin added. While some are struggling to survive, trying to cover their basic needs, others may have attained survival and now making long-term future plans, but they often run into another crisis, a crisis of significance. . . .

“During turbulent times, a lack of planning may lead to an unexpected economic crisis in families,” warns Freedom Finance Global analyst Vladimir Chernov. Right now, planning is as relevant as ever; however, it must fit the new realities that society now faces, says Sergei Zubov, senior research fellow at the Gaidar Institute [for Economic Policy]’s Financial Research Laboratory.