2016-05-17
Survey: If income were to increase, majority of residents would put it aside for saving
Every second household assesses their financial situation positively, the same number of households manage to save. However, having lost their major source of income, the majority of residents would manage to live off their savings for up to a month or even less, shows the latest Bank of Lithuania Review of the Survey of Households.
‘Almost half of families continue stating that every month they manage to save a little; moreover, four out of ten households indicate that they would put aside the majority of their funds, if their income increased by one-fifth or more. These continuing trends suggest that a number of households are becoming financially more resilient, since the most commonly indicated incentive to save is precisely the wish to feel more secure in the face of financial hardships’, said Andrius Škarnulis, Head of the Macroprudential Division of the Financial Stability Department at the Bank of Lithuania.
Households mostly save in order to secure themselves against a likely deterioration in the financial situation (59%) or to have sufficient funds for contingent expenses (48%). One out of three households saves for long-term goals, e.g. their children’s education, retirement or pricier purchases in the future.
Almost half of households manage to save (47%). Just like last year, households indicated that they saved, on average, from EUR 31 to EUR 150 per month (claimed 47% of households that saved), while a fourth of households that saved were able to put aside more than EUR 150 per month (during the previous survey — 28%). Nine out of ten respondents that over the previous half-year managed to save stated that they intend to continue to do so, whereas overall almost two out of three households hope to save. However, surveys show that even though the majority are willing and planning to save, a large share of residents does not do so.
When facing financial difficulties, almost every second (44%) household would, first of all, try to cut their expenditure (during the previous survey — 36%), while every fifth would borrow from family or friends.
Overall, one out of two families assesses their financial situation positively. However, over the half-year the share of such households reduced somewhat. The share of households that assessed their financial situation negatively increased the most among those earning the lowest income (less than EUR 350 per month) (from 64% to 82%).
In terms of borrowing, residents do not see major changes: slightly less than a fifth of residents indicated that they had some sort of financial liabilities, while almost half of the surveyed with financial liabilities continued to view current financial liabilities as a heavy burden; the number of those that were not able to settle their financial obligations, however, diminished.
The majority of the surveyed believe that housing prices will either remain unchanged (26%), or increase by no more than 10 per cent (29% of the surveyed). In addition, the share of those believing that housing prices will rise by more than 10 per cent increased by almost 8 p.p.
This year, for the first time, the Bank of Lithuania tried to work out the level of financial literacy of residents. The results show that only one out of six respondents managed to give correct answers to questions related to borrowing, inflation and accumulation of funds. According to Škarnulis, this suggests that definitely not all financial decisions made by residents are rational.
More trends are available in the Review of the Survey of Households, conducted on behalf of the Bank of Lithuania.