About half of households save part of their income. Most often, EUR 31 to EUR 150 were put aside every month – this amount was reported by about half of households that managed to save at least a little in the first half of 2016. Residents aged 18–29, capable of doing so, increased in number. A fourth of residents of this age assessed their financial situation as good. This is shown by the results of the latest Survey of Households, conducted on behalf of the Bank of Lithuania.
‘The key incentive to save, as reported by every other household, remains the same as before: the aim to hold sufficient funds for contingency expenses and a potential deterioration in the financial situation in the future. Slightly more than a fourth of those surveyed saved for the education of their children, old age, and other long-term purposes; this was done mainly by middle-aged people. Older residents more often reported accumulation of a financial reserve as their reason for saving. Compared to the previous survey, changes were seen in the saving objectives for youth: funds were put aside more frequently for short-term purchases,’ said Simonas Krėpšta, Director of the Financial Stability Department of the Bank of Lithuania.
Reasons for saving
(% of all households that managed to save within a respective age group)
Most respondents (around 69%) believed their income would remain unchanged; however, every other respondent indicated that their expenditure would rise (half a year ago, there were fewer stating so – 34%). Every third household reported, in already the third consecutive survey, the increase in food prices as the major reason for concern. Residents for whom the rising prices for utility services will raise major concerns increased in number – from more than a tenth to a third.
Four out of five households reported that they plan their income and expenses, while in the event of a money shortage, they would try to cut expenses and only then contact relatives or friends, asking to borrow, or would look for an additional source of income. Should expenses grow by more than 20 per cent over the year, four out of ten households would save a major part of the funds.
Every fifth household believes that housing prices will remain unchanged in the next 12 months, while the expectations regarding price increases have been slightly weaker in major cities. Housing price increases in the next 12 months are overall expected by more than half (58%) of surveyed households, while 3 per cent of respondents reported the prices would fall. In the previous survey, about 9 per cent of households expected price declines.
Three financial literacy questions were presented in the Survey for the second consecutive time: comparison of the terms and conditions for two loans, calculation of interest on deposit, and the impact of inflation on funds accumulated. Only every fifth household answered all three questions correctly. In the previous survey, correct answers were given by 16 per cent of households. The most difficult question was on the calculation of interest on deposit – only 43 per cent of households gave a correct answer.
The detailed Review of the Survey of the Financial Behaviour of Households is published on the website of the Bank of Lithuania.
Such surveys are conducted on a biannual basis; they are devoted to defining the saving and borrowing habits of households and their reasons for doing so, to find out how households assess their current financial situation. The surveys also include questions about the future expectations of households: changes in their financial situation, saving and borrowing plans.