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Wednesday 28.06.2017 | Name days: Kitija, Viesturs, Viestards
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Residents expect their revenue to increase in the next five years

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU58% of Latvian residents expect their income to increase in the next five years. 25% of residents believe their income will remain the same, according to data from Nordea Bank’s study about residents’ savings.

«These results should be taken in with caution, because they show a generally optimistic attitude of Latvian residents towards the development of the country’s economy. It should be reminded that growth is always followed by a decline. Because of that, it would be best to divert additional income towards formation of savings, not creation of new expenditures,» says Nordea Bank’s Investment Consultancy and Solutions Office manager in Baltic States Anzelika Dobrovolska.

The specialist also predicts that as economic growth stabilizes and unemployment reduces, inflation in the country will start gradually growing.

She says: «Average wage in the past four to five years has growth by approximately one-fifth. This forced employers to increase prices on their products and services. This chain reaction allows us to assume that residents’ income will continue to grow in the next couple of years.»

At the same time, Dobrovolska notes: «We can now afford to spend more money than before – we see the economy has stabilized and people have begun spending. But it is important to keep in mind that increase of wages stimulates growth of prices of goods and services. This is why the optimism reflected in the study should be viewed very cautiously as a trend. Before making any major purchases, it is always important to keep in mind formation of savings.»

Dobrovolska says that Latvia’s deposit culture and traditions develop slowly. We often think only wealthy people can afford to make savings and deposits. Any one of us can deposit money with as little as 30 to 50 euros every month.

«Investments can be performed in the stock market or real estate market. Residents are also able to invest money in pension funds or life insurance products. Savings offer people an opportunity to improve their financial stability and welfare in a long-term perspective. It is no secret that life expectancy increases every year but pensions provided by the state still do not fit people’s actual everyday needs,» says the specialist.

Continuing, she adds: «We have become more careful after the crisis and we have re-assessed our income volume. As for expenses, we often focus on loans and expenses associated with utilities. Most often people spend the largest amounts of money on purchases made sporadically and purchases of things they don’t really need. A reasonable use for saved up money would be diverting them towards savings.»

As for how much money residents should divert to savings, the specialist says: «Experts recommend diverting at least one-tenth of the monthly salary to savings. This kind of discipline will help save a considerable amount over many years.»

Ref: 225.109.109.2510


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