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Friday 23.02.2018 | Name days: Haralds, Almants

Every fifth Baltic resident keeps savings at home

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe highest level of savings among residents of Baltic States belongs to residents of Estonia 83%, followed by Lithuania with 66% and Latvia with 53%.

Since 2011, there have been significant improvements noticed in terms of residents’ savings. The proportion of people who do not have any financial reserves has reduced in all three Baltic States, according to information from the Swedbank Private Finances Institute.

The majority of residents of Baltic States agree that it is important to divert money to savings; this attitude has not changed at all over the past three years. The positive trend is that the proportion of residents who form savings has increased over the years. This allows for the conclusion that people’s actions complies with their beliefs.

According to the head of the institute Ieva Use-Cimmermane, the practice of making long-term savings teaches that the size of reserves should be equal to a family’s three to six month income. The average monthly wage in Estonia was EUR 790 in the first half of 2014. The average wage in Latvia was EUR 551 and EUR 527 in Lithuania.

Residents mainly create savings for emergencies (67% of Latvians, 62% of Estonians and Lithuanians). The second most popular reason for making savings is coverage of additional expenses (travel or planned purchase). This is followed by savings for housing purchase or repairs, child-related costs and retirement.

There are two main ways how Baltic residents divert money to savings: one of them is using the money that remains after everyday expenses and the second – allocation of a specific amount of money from the monthly salary. These two options are used more or less equally in Lithuania (41% and 39% respectively). Differences between these two options are more apparent in Latvia and Estonia – residents in Estonia are more likely to divert what money they have left to savings (45%). Residents in Latvia, on the other hand, would rather allocate a specific portion of their monthly income (45%).

According to private finances institute’s expert Evija Kropa, even a small amount of money diverted to savings can become a much larger amount if diverted regularly. It contributes more to savings than diverting whatever amount of money is left after everyday purchases.

Residents in Latvia and Estonia more often divert up op 5% of their monthly income to savings. In Lithuania, on the other hand, residents usually divert up to 10% of their monthly income.

As one of the main obstacles toward creating savings, residents mention insufficient income. The majority of residents – 69% in Lithuania, 60% in Latvia and 56% in Estonia – admit that it is possible to use one-tenth of their income more effectively. With that, it can also be concluded that the creation of savings is a process that can be influenced by people’s attitude toward savings and habits, as concluded by bank specialists.

The ways of making savings have not changed over the past several years. Keeping savings on a bank account remains the most popular option: 76% of Estonians, 44% of Lithuanians and 33% of Latvians keep their savings in banks. Every fifth Baltic resident also has savings at home.

Ref: 102.109.109.6782


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