Lithuanian Savings Grow: How Long Could They Live Without a Salary?

Lithuanians are demonstrating a significant increase in their ability to withstand income loss, with nearly one in five now able to survive on savings for over a year. This marks a substantial improvement from 2016, when only 3% of respondents reported having such a financial cushion. Concurrently, the number of people relying on savings for three months or less has dropped considerably, from 57% to 28%.

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A larger reserve gives people more time to adapt to income loss, avoid hasty borrowing or selling investments at unfavorable times.

This shift suggests that Lithuanians are not only saving more frequently but are also accumulating larger real reserves. Dalia Kolmatsui, Head of Private Client Services at Artea Bank, notes that a larger reserve provides individuals with more time to adapt to income reductions, avoiding hasty borrowing or selling investments at unfavorable times. However, she emphasizes that accumulated savings alone do not guarantee financial security; careful planning is essential.

The trend extends to investment activities, with 35% of Lithuanians investing this year, a notable rise from 27% last year and just 13% in 2016. Over a fifth of investors allocate more than €200 monthly to investments. Kolmatsui explains that while savings offer a readily accessible emergency fund, investments are better suited for long-term goals, indicating a growing focus on financial futures.

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It is pleasing that residents are not only saving more often but are also investing more actively – this shows greater attention to their financial future.

While financial planning has also increased, with over a quarter of respondents having a plan compared to 15% a decade ago, the time horizon for these plans is shortening. More than 40% of those with plans are looking only up to two years ahead, a decrease from previous years. Indrė Genytė-Pikčienė, Chief Economist at Artea Bank, attributes this to economic uncertainties, geopolitical tensions, and new risks, prompting shorter planning horizons and a greater diversification of investments.

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Changes in purchasing power, interest rates, and real estate prices affect people's behavior, habits, and investment choices. Meanwhile, increased uncertainty, geopolitical tensions, and new risks are forcing people to shorten their personal finance planning horizons, review financial plans more often, and seek solutions that diversify investments more.