By setting aside part of their monthly income, 31% of the Baltic population have saved up to 5000 euros, while 21% have saved more. In general, the highest savings are among Estonians, but in Latvia there are more people who have no savings at all, according to Luminor Bank’s survey of the population*.
30% of people in Latvia and Estonia and 32% of people in Lithuania have saved up to 5000 euros. 11% of Latvians, 23% of Lithuanians, and 28% of Estonians have managed to save more than 5000 euros. The highest savings in Latvia are in Zemgale and Riga.
Jekaterina Ziniča, Business Development Manager at Luminor, recommends saving between three- and six-months’ salary: “Having savings is one of the most important prerequisites for financial security, as they serve as a cushion in case of sudden expenses, economic fluctuations, or job loss. As the average salary in Latvia after tax is around 1000 euros, the average savings should be at least 3000 euros. However, each person needs to assess his or her monthly expenses individually and build up the necessary amount of savings for unexpected situations accordingly.”
One third of Latvians cannot afford to save
While in Estonia a quarter (25%) and in Lithuania about a fifth (18%) of the population have no savings, the survey shows that up to a third of respondents (32%) live without savings in Latvia because they do not have enough money to put aside. Moreover, comparing the data from the survey conducted in March this year with the answers of respondents in a similar survey** last December, savings in winter fell the fastest, by 16%, for seniors aged 60 to 74 and for people aged 30 to 39, whose savings fell by 9% in two months.
“Regularly studying the financial situation of the Latvian population, we unfortunately see that a third of the population is still unable to save: this could be due to low incomes and the rising cost of living, as well as a lack of savings habits. Some people may be afraid of losing their money because they don’t always have enough information about how financial markets work, so they choose not to invest. Ideally, around 10% of income should be set aside each month for saving. The most worrying fact is that the largest share (36%) of people who don’t have enough money to save are aged between 30 and 39, when jobs and incomes should be stable and growing," says Ziniča.
Most people in the Baltics do not plan to deposit their savings; if they do, it’s for a longer period
Almost half of the Baltic respondents (48%) do not plan to deposit their savings this year, while 17% of Latvians, 15% of Estonians and 7% of Lithuanians have not thought about depositing their spare money, especially the youngest Latvian respondents aged between 18 and 29. Of those considering a deposit, 72% of Baltic people would opt for a medium to longer-term deposit, starting from one year.
“Society needs to be encouraged to build savings habits and educated about the opportunities to save according to people’s needs, whether it’s short-term savings or a longer-term, more targeted investment. A new generation of middle-income earners has entered the labour market, but the long-standing low interest rates on term deposits have made them an unattractive form of saving for customers and have left a part of society poorly informed. For those who have saved a larger amount of money, it’s important to differentiate risks by not investing all their savings in one place, but by making both term deposits and investing in alternative instruments, including funds, shares, or pension funds, where it’s possible to receive a personal income tax refund of 20% of the amount of contributions made," the bank’s expert recommends.
* The Luminor Bank survey of the population was conducted in March 2023 in cooperation with the research agency Norstat, with 3,020 respondents aged 18 to 74 in Latvia, Lithuania, and Estonia.
** Luminor Bank survey conducted in December 2022 in cooperation with the research agency Norstat, with 1,008 respondents aged 18-74.