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2013.12.02 16:56

Bank of Lithuania: Only every other family calculates their expenses

DELFI|The Lithuania Tribune2013.12.02 16:56

Most households manage to save at least a little, and accumulate their savings conservatively, reports The Bank of Lithuania.

 Most households manage to save at least a little, and accumulate their savings conservatively, reports The Bank of Lithuania.

However, the Bank notes that one third of the families have financial liabilities, which are seen as a burden by nearly half of those in debt. Nevertheless, a large share of the households do not plan their income and expenses at all, show the results of the survey of the financial behaviour of households conducted on behalf of the Bank of Lithuania.

“While household possibilities to save have been increasing, the survey revealed gaps in financial awareness. A large part of households manage their personal finances quite chaotically – do not plan either income or expenses, while making important decisions relying on the advice from friends and acquaintances, but not specialists,” says Darius Kulikauskas, economist of the Macroprudential Analysis Division of the Financial Stability Department of the Bank of Lithuania.

More than half of the surveyed households (54.4 per cent) claim saving up to LTL 500, 6.2 per cent—LTL 500 to LTL 1,000, whereas nearly 2 per cent of families—over LTL 1,000 per month. The share of families that manage to save has increased by almost 4 percentage points over a half-year. Slightly less than a third of the respondents (30.7 per cent) reported saving nothing. Compared to the survey conducted in spring, the share of such families contracted by 2.3 percentage points.

Households accumulate savings conservatively: an account or deposit with a bank (54.1 per cent of households saving at least a little) and cash savings (52.5 per cent) are quite more popular than other financial instruments—life assurance (15.9 er cent), investment in pension funds (12.4 per cent) or real estate (7.3 per cent).

One third of the surveyed households have financial liabilities; the respondents mostly borrow for consumption and house purchase. Households with less income more often than the respondents within other income groups borrow from family or friends, or take out fast credits. Nearly one fifth of such households reported having a loan from a fast credit company.

A little over a half of the surveyed (50.4per cent) having financial liabilities claimed that these liabilities were a burden for the household, while one fifth reported about a default in their liabilities at least once in the recent six months.

In view of the need for financial education, the Bank of Lithuania this year presented an initiative for the financial education of the public – the website www.pinigubite.lt. It presents information, advice and means to help wisely manage own money. In addition, the Bank of Lithuania organises free of charge seminars to the public about responsible management of own funds and borrowing.

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