Inflation eats away at the purchasing power of the middle class, and many have to think about their spending habits. However, according to experts, it seems that the vast majority will survive the winter with minor bumps.
Salokannel and Kähkönen wonder how other Finns will survive this winter financially if they don’t succeed.
Salokannel and Kähkönen consider themselves to be middle-class Finns. There is nothing to worry about money, but before this winter, there was still extra left over from the salary to build a house, buy an electric car and go boating. In autumn, a holiday trip is sometimes taken.
Now the couple’s finances have gone completely awry in a couple of months.
We found out how last year’s turmoil has affected the financial situation of the middle class. Will the middle class survive the winter with dry feet?
Unlucky lotteries don’t blow up everyone’s finances
Salokantele’s income was bigger than expected, which is why more taxes had to be paid at the end of the year. While there was much less money in hand, the electricity bill in November was a record high.
– If before I had 800 euros left in my account after invoices, now I have 80 euros left, Salokannel says.
The couple is most worried about the electricity bill for the coming months. Kähkönen has calculated that on the worst frosty day in December, exchange electricity cost them more than 70 euros. If there are long continuous severe frosts during the winter, the bill can be up to 2000 euros.
Already in the summer, Finns were talking about fuel, but it seemed that bills and the price of electricity didn’t really bother the middle class.
In the study, people classified as middle-class worried more about things broader than their own everyday life, such as climate change and government debt. Less than a third of the middle-class respondents thought that, for example, falling prices and stopping inflation would bring them peace of mind, while the percentage of other respondents was more than half.
The severity of financial shocks depends a lot on the type of housing, loans, electricity contract and the need to travel by car. It also affects whether there are children in the household and whether several adults are sharing the financial blow.
The uncertain situation can be seen, among other things, in the fact that the number of loan applications has decreased. Many have, for example, moved their past due to uncertainty.
In the bigger picture, the middle class has still been able to hold on to their old ways of life. According to Nummi, for example, the Christmas store showed no signs of fading.
Finns accumulated savings during the corona years, when money could not be used for trips, restaurants, gigs and other nice things like before. On average, Finns saved an amount that corresponds to about ten percent of their annual income.
Most of the middle class survive with their feet dry
Kähkönen and Salokannel have a short discussion about how the ladder should be held.
– The style doesn’t matter, as long as the ladder stays upright, Kähkönen states.
Salokannel clings to the icy ladder, and Kähkönen starts to climb up it to the roof. On the roof, he uses a long-handled shovel to remove the snow from the solar panels.
Cleaning the solar panels is one of the desperate things the couple has been doing all winter. In this way, the solar panels are immediately ready to produce electricity when the sun is willing to show itself.
– We have done everything we can to save electricity. We have already made large investments in the energy efficiency of the house. In the words of the song, we are constantly thinking about what we could still save, Salokannel reflects.
Salokannel and Kähkönen seem to belong to the losers of the unlucky lottery. According to experts, it seems that in the big picture, the middle class will get through the winter well.
– For the majority, this is not a disaster, but a small deterioration in the standard of living. But the socks of some will definitely get a little wet if there is a lot of loan and there is, for example, an electrically heated detached house, says Nordea economist Kostiainen.
All experts emphasize that the survival of the middle class is most influenced by whether people have jobs. At the moment, the employment situation in Finland seems good.
– As long as a person has a job, he can adjust his consumption. If the work stops, it can be difficult to pay the electricity bill and the loan, says Nummela, OP Financial Group’s business director responsible for retail banking.
The middle class has survived financial hardships well in the past. EVA’s research manager Haavisto reminds us that the middle class did not suffer even though the pandemic messed up many people’s finances. In 2016, the median income of Finns was less than 2,000, now it is more than 2,200. The consumption possibilities of middle-income people have also grown little by little.
Many economists have estimated that inflation would slow down next year. It is also believed that the average price of electricity will decrease permanently.
Electricity support for those who need it
It is sad for Salokkanne and Kähkö that they have tried to prepare for the winter electricity bills, but the electricity company only postponed the due date of the bills by a month. The couple hoped they could split the large electricity bills over several months. In the summer, the solar panels produce the family’s electricity, which would make it easy to pay off the electricity bills. The electricity company has agreed to postpone the bill by one month, which does not solve the winter problem.
The couple is also indignant at how some decision-makers have strongly opposed the electricity price ceiling, because then people would not curb their electricity consumption.
– What would that waste of December have been? People would have gone to the Christmas sauna, made boxes and baked peppers. It seems that some people are completely alienated from what is happening in society. They comment on television, but they don’t have a problem with it, says Salokannel.
Electricity bills have already messed up some people’s finances. The number of payment failures caused by unpaid electricity bills increased in Finland last year. The credit information company Suomen Asiakastieto says in its release that the number of payment failures caused by electricity bills increased by about ten from the previous year.
In EVA’s research manager Haavisto’s opinion, it would be important to create better ways to get subsidies for those who really need help. Income registers would make it possible to monitor people’s financial situation, but they have not yet been utilized.
Kähkönen gets serious when he is asked how they plan to survive the winter if the electricity bills are close to two tons.
– I don’t know how we will survive. I’m really looking forward to what kind of decisions will be made about electricity support. There has been talk of a price ceiling of 20 cents. But is that enough, Kähkönen wonders.
– Acquiring electricity and heat should not be the last straw for anyone’s finances, Salokannel adds.
*For the news, Jussi West, Research Manager of Taloustikkusmas has also been interviewed.*
*You can discuss the topic until 11:00 p.m. on January 6, 2023.*