Though it has improved over the course of the year, financial health in Latvia remains considered rather weak. It is also in the worst position when compared to situations in other Baltic States and Sweden, according to Swedbank representatives.
A large number of residents in Latvia do not have sufficient savings and have poor protection of their finances against emergency situations. On top of that, Latvian residents are not very good at managing their everyday budget. A third of Latvian residents have difficulties making ends meet, as mentioned in the results of the study performed by the bank.
Over the course of the year there was a slight improvement of Latvian residents’ weak financial health. Uncertainty about their financial state went down as well. Nevertheless, it remains rather high. While a year ago only every fifth Latvian resident was confident about their monetary affairs, this year this sentiment is shared by every fourth resident.
Results of the study show that residents were able to improve the sense that finances grand them freedom to do what they want both now and in the future.
Last year this sense of freedom was mentioned by 17% of respondents. This number is now 26%. It is more or less equal among men and women. A year ago there was still a gap between the two genders.
Reinis Jansons, Head of Institute of Finances of Swedbank, notes that public financial health has improved over the course of the year. Growth is observed in all positions surveyed by the financial health index – both in terms of financial literacy and financial capabilities. Jansons stresses that this is especially positive when considering the complicated geopolitical situation and price rise.
Nevertheless, good financial health is a relative term and it depends on each household’s individual situation, explains Jansons. Although higher income does make it easier to manage expenses and form savings, this alone is not a prerequisite for good financial health. In the higher income segment a large number of residents do not have reliable savings, insurance or deposits. One of the prerequisites for better money management ability is good financial literacy.
At the same time, a comparison of index results and residents’ own assessment, it becomes clear that people overestimate their financial literacy. More than half of residents said in the survey they have sufficient knowledge to manage their monetary affairs.
Looking at financial health in various age groups of Latvian residents, the study concluded that financial health is the strongest among thirty-year-olds, who generally have the best knowledge when it comes for finances, followed by seniors, who are able to successfully balance their income and expenses.
Men in Latvia have a slightly higher financial health index than women, and the difference comes from both different financial capabilities and level of financial literacy. Latvian residents’ financial literacy is the weakest when it comes to securities and the influence loan repayment length has on interest.
The Institute of Finances of Swedbank carried out the second consecutive massive survey across Latvia, Lithuania, Estonia and Sweden, reflecting residents’ financial skills and habits. The Financial Health Index composed as part of the survey is intended to measure society’s overall financial health. Indexes therein provide an accurate assessment of the situation in Latvia. The survey was carried out in January 2024 on Kantar Sifo platform. 4 000 internet users from Latvia, Lithuania, Estonia and Sweden were interviewed.
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