On Wednesday, the 10th of May, the head of Financial Literacy Office of the Bank of Latvia Aija Brikše reported at a discussion organised by the bank that Latvian residents’ financial literacy remains unchanged. In October 2022 a survey revealed that the index of Latvian residents’ financial literacy was 12.2 points out of a possible 20.
In 2015 a survey revealed that residents’ financial literacy index was at 63%. The average index across OECD member states was 62% in 2019.
Brikše said financial literacy is especially low in the age group between 18 to 19 years (8 points out of 20), residents with primary or unfinished education (9.2 points). Financial literacy is also lower than the average in the country among unemployed residents (10.8 points) and residents whose wage does not exceed EUR 350 a month (11.2 points).
At the same time, Brikše said that
over the course of seven years financial resilience against various financial shocks has improved in Latvia.
For example, the number of residents who can afford to pay unexpected expenses equal to monthly income has increased by 14 percentage points – to 43%. The number of residents with a financial “safety pillow” has increased to 35%. The number of residents who are unable to cover living costs in full has gone down to 20% in recent years.
Brikše mentioned that results of the Financial Literacy Index in 2022 showed an improvement in residents borrowing, savings-making and financial planning habits. Long-term financial planning, however, remained low.
Results of the most recent study show that residents’ financial literacy is lower than it was before.
The expert said the financial knowledge index – on a scale of 0 to 7 – went down to 3.9 points (5.1 points in 2015). The financial knowledge index is especially low – three points – in the age group 18 to 19 years. Only 40% of respondents from this group correctly answered the question in regards to the simple calculation of interest.
The financial behaviour index remains almost unchanged – 5.4 points or 60% of the maximum result. In 2015 this index was at 5.3.
At the same time, Brikše admits the overall attitude towards finances has improved significantly – the index is 5.4 points or 72.5%. The study performed in 2022 revealed that 56% of respondents believe money exists to spend it, 32% prefer spending, rather than saving it in a long-term perspective,
25% prefer to live in the moment and not worry about tomorrow.
Results also show that only a small portion of residents have plans for their pension, says Brikše. 13% believe they have done a good job with their pension plan. 27% of residents believe they have not done enough. Another 30% do not even have a pension plan. 37% of respondents have plans to continue working after they reach pension age.
Brikše stressed that a small number of Latvian residents have deposit accounts – 1% have opened a deposit or securities account, 1% have bough shares and capital shares, and 2% have purchased crypto-assets.
The digital financial literacy index is at 4.6 points or 46% of the possible result. 36% of respondents believe a digital contract can be considered valid if it is available in printed form. 35% do not agree with this. Results also show that 51% of youngsters believe crypto-assets are as legal a tender as notes and coins.
Brikše also stressed that only 10% of residents regularly change passwords on websites they use for online shopping and finance management.
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