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Saturday 26.05.2018 | Name days: Varis, Eduards, Edvards

Swedbank: Latvian residents often lack the money to cover all expenses

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvian residents plan their family budget in a short-term perspective. Because of that, they often lack the money to cover all expenses, according to data of a study performed by Swedbank Institute of Finances.

Although 55% of Latvian residents say they regularly plan their finances and 34% do that only when such a need arises, the family budget-planning horizon is rather short.

69% of residents plan their family’s budget within one month. In a longer-term perspective, however, budget-planning is performed less often. This means that in the event of an emergency or losing regular household income, 49% of residents would be able to maintain their quality of life for no longer than one month.

In regards to budget-planning in Baltic States, residents are surprisingly unified in opinion – the majority of respondents in Lithuania and Estonia admit regularly planning their budgets (61% and 56% respectively). The study’s data shows that younger residents are usually less interested in budget-planning affairs, preferring to plan their budgets only when a need for that arises. Fortunately, as the age range goes up, so does the proportion of residents who plan their finances very regularly.

Retired pensioners are the most regular budget-planning practitioners (67%). The same applies to residents with medium-sized income (60%). «What is particularly interesting is that relationships with partners add corrections to family budgets. Married residents are more careful budget planners than single residents,» authors of the study say.

The main goal of budget-planning in all three Baltic States remains unchanged – so that there is enough money to cover regular payments and any immediate expenses (69% of Latvian, 62% of Lithuania and 57% of Estonian residents).

The next important aspect of budget-planning for residents in Latvia and Estonia worth mentioning is the creation of savings for a ‘safety pillow’ (41% in Latvia and 47% in Lithuania), as well as ensuring the ability to afford bigger purchases (33% and 38% respectively).

«Although the majority of residents plan family budget, we also see that families are mostly focused on the short-term perspective. Our study data shows that three out of ten households have experienced in the past couple of years situations when their monthly income was not enough to cover everyday expenses. However, when planning the family budget, it would be best to avoid such situations,» says expert of Swedbank’s Institute of Finances Evija Kropa.

She notes that growing technological development has helped make different purchases and payment processes automated and nearly invisible and control of expenses and budget-planning more important. «Technological development can be used to simplify everyday life, leaving data processing to technologies – it helps save time and make the planning process more convenient,» Kropa continues.

It should be said, however, that most view the budget planning process as a method for monitoring money flow (47% of Latvian, 52% of Estonian and 61% of Lithuanian residents). Only a small number of residents say they carefully monitor their monthly expenses (13% Latvian and Lithuanian, 16% Estonian residents). Planning is often performed in the mind, without putting anything on paper or using any special programmes or applications – this method is present in all three Baltic States (52% in Latvia, 57% in Estonia and 68% in Lithuania), says the study’s representative.

«Financial planning is not limited to monitoring of expenses. It consists of measures that help residents make reasonable decisions and accomplish short-term and long-term goals. Often we address financial matters only on the surface, monitoring only expenses or focusing on a small portion of available finances that is not worth planning. This is admitted by every fourth resident in Baltic States. Behaviour can be exactly the opposite as well – the less money we have, the more careful planning is required,» Kropa comments.

When asked how they organize control over income and expenses, respondents in Latvia and Lithuania most often mentioned having a family budget (45% in Lithuania and 39% in Latvia). Estonian residents most often practice division of income among partners, agreeing on specific categories for expenses each partner is responsible for (35% of respondents).

Ref: 224.109.109.6098


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  1. jj says:

    Well – Swedbank made 27,000,000 profit in the first three months of this year! Where does it all go? Obviously a lot in tax, but presumably the rest of it leaves Latvia.

    It is disgusting that they are able to make so much profit in such a small country. Why do they not pay their employees more and cut their ridiculous charges to customers?

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