Financial worry as threat to financial security

The Covid-19 pandemic has disproportionately affected the most vulnerable around the world. According to the World Bank, the 2021 pandemic has plunged another 97 million people into extreme poverty.

During the pandemic, hundreds of millions have found it difficult to meet their medical expenses. 60 percent of respondents in Nigeria have experienced or continue to experience financial difficulties as a result of the Covid-19 crisis.

What financial worries mean to one may not be the same to another, as some see it as a multifaceted basket.

However, the importance of financial worries depends on objective factors such as: B. how much you earn, as well as subjective perceptions of what constitutes a financially secure life in your particular society.

Therefore, it may be correct to assume that people struggling to survive are more concerned about money than people with savings and access to credit

Therefore, it may be correct to assume that people struggling to survive are more concerned about money than people with savings and access to credit. However, there are broader societal factors that influence concerns beyond income limits, such as the quality of health care systems and the effectiveness of social security programs.

Despite their importance, especially for developing countries, financial concerns and their determinants have received little attention from academics and policymakers. For example, the World Bank’s Global Findex 2021 report is the first attempt to measure financial anxiety globally and is therefore an essential step in closing the knowledge gap in this area.

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Additionally, a quarter of all respondents in Nigeria said paying for healthcare was their top concern. In contrast, only one in five respondents in high-income countries said they were worried about paying their medical bills.

These responses may partially reflect the quality and accessibility of local health services in some countries. Concerns about medical expenses were also generally greatest in sub-Saharan Africa (SSA), where the Covid-19 pandemic has been testing limited health services.

Better health systems design and performance, and more affordable health care would help allay some of these concerns. Expanding financial inclusion – access to and use of formal financial services by households and businesses – can also help reduce financial anxiety. Politicians see it as a way to help families better protect themselves from shocks.

In many developing countries, a sudden illness or accident that forces a breadwinner to stay at home can exacerbate the impact of an external crisis – like the Covid-19 pandemic – with lost income.

The availability of formal financial services, such as targeted insurance programs, can, over a period of time, help vulnerable families ease the pain of the immediate crisis.

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The Covid-19 pandemic remains an ongoing public health and economic crisis. 60 percent of adults in Nigeria said they were very concerned about the ongoing financial drain from the pandemic.

Women, more than men, said they were very concerned about the financial hardship caused by the pandemic, with 58 percent of women surveyed in Nigeria saying so. The data confirms the declining impact of the pandemic on the most vulnerable populations.

The data from the survey also uncovered prominent regional themes. In Nigeria, for example, 28 percent of adults are most concerned about school costs, which is the top concern for 33 percent of adults in sub-Saharan Africa. In contrast, in South Asia, only 18 percent of adults rank school fees as their top concern.

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The high proportion of adults with school-age children in sub-Saharan Africa may partly explain this concern. It also reflects the high intrinsic costs associated with schooling in the area.

There are also regional differences in the assessment of future prospects. East Asia is the least concerned about spending in old age, while more than half of sub-Saharan adults surveyed said they were most concerned.

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A lack of concern about retirement spending does not necessarily reflect a sense of future security. Instead, it might reflect the urgency of more immediate financial needs than retirement planning.

Financial inclusion has expanded in recent years, the Findex report finds that 3.3 billion people in developing countries had accounts in 2021. He also found that in Nigeria, 45 percent of respondents had an account. However, only 8 percent of Nigerians surveyed said they had a mobile money account.

As a result, the financial worry gap between developed and developing economies remains, with half of adults in developing economies reporting a high level of concern about one or more common financial expenses. While in high-income economies, only about 20 percent said the same.

Financial worries affect overall well-being and are associated with lower productivity and suboptimal decision-making. It also points to gaps in existing global efforts to build financial resilience. As a result, hundreds of millions in developing countries are left dangerously unprepared to face economic shocks from emerging global challenges such as climate change. Findings from the Findex 2021 report underscore the urgency of protecting them.


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