One-third of French people have dipped into their savings to make ends meet
A study conducted for XTB France by TGM Research examines the financial trade-offs households are making as the school year begins. The key figure for wealth management can be summed up in a single line: 33.4% of French people have drawn down their savings over the past twelve months.
Contingency savings are meant precisely for this purpose, and there is nothing unusual about them fulfilling their role. What is striking, however, is the position they occupy on the list of trade-offs. Drawing on savings ranks on par with cutting back on food expenses—cited by 33.1% of respondents—and just behind cutting back on leisure activities, chosen by 51.9%.
The overall sentiment is clear: 82.1% of French people believe their purchasing power has declined over the past twelve months. And the pressure shows no signs of easing in their minds, as 79.2% cite rising prices as one of their top concerns for the end of the year—far ahead of the government’s budget decisions, mentioned by 48.2%, and international tensions, cited by 38.4%.
Projects Take Precedence Over Savings
Two findings from the study describe a two-step process of giving up on projects. First, postponement: 21.7% of respondents put off an important project. Then, abandonment: 18.4% gave up on it entirely. The gap between these two figures is small, suggesting that a project postponed in this context is likely never to be revisited.
This tendency to put things off also affects financial decisions themselves. Nearly one in two French people—44.7%—report having postponed at least one decision regarding their savings or investments over the past twelve months. Opening a retirement savings plan (PER), adjusting a life insurance policy, setting up a recurring payment—these are the kinds of actions that are easily put off, since nothing bad will happen the next day if they aren’t done.
The hierarchy of sacrifices is also revealing. Leisure activities are the first to go, with 51.9% of households cutting back on them, because they can be eliminated without having to negotiate with anyone. Food follows closely behind at 33.1%, which speaks volumes about the extent of the financial strain faced by some households. Savings, meanwhile, stand at exactly the same level—33.4%—even though, in theory, they should serve as an adjustment variable before food.
The Hidden Cost of Waiting
This is precisely where short-term budget planning backfires on the saver. Delaying the start of a monthly payment of 150 euros by one year means giving up 1,800 euros in principal and the interest it would have earned over the remainder of the investment term. Over a twenty-year horizon, the year lost at the outset carries more weight than any subsequent year.
The same trade-off applies to taxes. A contribution to a retirement savings plan entitles the contributor to a deduction from taxable income up to the annual limit, and any unused portion of that limit can be carried forward for only three years. A saver who suspends contributions for two or three consecutive years not only loses out on returns but also forfeits a tax benefit that cannot be recovered.
However, there is a middle ground between continuing as before and stopping everything: reducing the amount without interrupting the payments. Reducing a scheduled payment from 200 to 50 euros preserves the automatic process, maintains the habit, and avoids the decision to resume payments—a decision that often never happens. Life insurance policies and retirement savings plans all allow you to lower a scheduled payment—free of charge and with just a few clicks.
The fact remains that these percentages encompass very different situations. A household that withdraws 400 euros from its Livret A savings account to cover an energy bill is not making the same trade-off as one that postpones signing a contract because it is waiting for clarity on the government’s budget. The former is suffering, while the latter is waiting.
The second scenario is the most interesting for a financial advisor. The uncertainty surrounding the French budget—cited by 48.2% of respondents as a concern—has a paradoxical effect: it encourages inaction at the very moment when certain programs might be changing. Yet postponing a savings decision is never tax-neutral, since a calendar year that has passed represents a year of contribution limits, tax deductions, or contract seniority that cannot be made up for.
And waiting—with deposit rates at 2.50% and sovereign bond yields at 4%—has never been more costly.
