Latgalians Save Money at Home
OREANDA-NEWS. On 26 May 2009 was announced, that almost a half or 45% of Latgalians keep saved money at home. Out of all regions Latgalians have one of the strongest wishes to save, though in reality a monthly sum devoted to savings is one of the lowest in
Latgalians are very willing to create savings – an average sum they would like to allocate to savings is 176 lats a month. It’s the highest figure in
Though in reality a monthly sum allocated to savings in Latgale is one of the lowest in
With their already created savings residents of Latgale could get along for 4.2 months on average in case of losing regular income. It’s the lowest figure among all regions although at the same time residents of
Approximately every third resident of Latgale says that in case of a regular income source it would be able to get along for one month in best case.
Latgalians – most cautious spenders in
Having studied the expenses structure of Latgale residents allows making a conclusion that already previously experienced complicated economic conditions in this region facilitated the fact that residents spend in a cautious way. At the same time 63% of respondents admit that they try saving by buying cheaper goods. 32% more think that they should change their habits and start saving. In any case one should remember that economy is not savings yet. Therefore not less important is a question – where do saved funds of Latgalians go?
Saved funds of Latgalians, first of all, mainly stay on their salary accounts, second, they are allocated to loan payments, and third – almost a half of residents admit that they simply keep saved money at home.
“Keeping money at home is almost the same as saving unspent money on a current account. In both cases there is a risk that it can be easily spent; besides saving money at home in the current situation is not really secure anymore and it doesn’t earn anything. One of basic principles of savings creation is a necessity to create a little barrier between oneself and money. In this case a savings account may fulfill this barrier function quite well – money is available and secure, at the same time it is not so easy to spend,” skaidro V.Toropovs.
Where to get funds for creation of savings?
Compared to other Latvian regions monthly home expenses take a significant place in the compulsory expenses structure of Latgale residents – 47% spend 101-150 lats on it, but 16% - 151-200 lats. While in Kurzeme accordingly 23% and 9% spend such sums, but in
It must be admitted that in Latgale after compulsory payments residents have comparatively less funds left on their habits than in other regions – 31% have 101 – 300 lats a month left. While 36% of Vidzeme residents and Zemgalians have up to 400 lats left on other expenses, this sum in
It should be mentioned here that within the research people with income over 400 lats were surveyed.
Habits that Latgalians spend money on also differ from other Latvian regions – 36% allocate to various purchases (not including food expenses) 41-100 lats every month. For comparison – 10% less people spend this sum in
At the same time residents of Latgale much less than in other regions spend on dining out, beauty treatment services, culture events and entertainment in clubs, bars and cafes.
“Sums we spend on habits may seem small at first, though it’s only until they are summed up. If at least once a month we dine out, go by car to a place we can go to by public transport, have fun, pamper ourselves with something tasty and make a small purchase, for example, shoes, we spend at least 135 lats. The question is – do we have to do so every month?” comments V.Toropovs.
New direction: from spender to saver
In the process of the research the Residents Habits Matrix was developed, in which the economic behaviour model of Latvian residents is shown (passive or active savers/spenders) and a risk level depending on the amount of savings.
More than a half or 53% of Latvian residents are described as “Spenders” – money mostly is spent and nothing is allocated to savings. This group of people finds itself in quite a risky position in case they lose their regular income. Interesting is the fact that also people with quite high income belong to this group as well.
As the opposite to “Spender” is “Active saver” that consists of 16% of Latvian residents, which is a comparatively positive tendency. These are people, which have created savings for more than a half-year’s period, besides they actively follow the economic situation to adjust their behaviour to it.
“Passive change introducer” and “Airbag searcher” are as a transition stage from “Spender” to “Active saver” – accordingly 12% and 19% of the society (see more detailed characteristics attached).
“What is clear is that the present economic situation requires a new way of behaviour – from spenders we must turn to savers. Everybody has his own justification why not saving therefore GE Money Bank has developed two solutions how to start saving easier – first of all, an action strategy for each type of residents in their way to savings creation, secondly, based on saving motivators of people, a new specially suitable product to these conditions has been created that will help to develop a „saving” habit – „Account of Opportunity”. It allows increasing or withdrawing savings at any time and it has the highest interest rate in the market – 9%,” explains V.Toropovs. (more detailed information on GE Money Bank solutions attached)
Savings as a new habit
Most often it is possible to reduce expenses in such categories as using public transport instead of a personal car when possible and shopping, which doesn’t include food expenses. It turned out in the research that Latgalians would be the least willing to reduce phone expenses not paid by an employer, 26% wouldn’t be ready to give up snacks and on average every fifth respondent wouldn’t be ready to reduce expenses on different purchases.
“A totality of habits forms what we call a lifestyle. Every habit is related to other. Therefore wanting to change some habits one encounters many and different obstacles. For example, a habit of not taking care of one’s finances allows living easier, in a more beautiful way, not bothering too much – but one has to pay for it with a bigger or smaller lack of money. How to change habits? The first answer – with the help of willpower. Unfortunately it’s often not enough – knowledge, cunning, at times – another person, help fro, outside. But the good news is that willpower is enough to start changes,” explains a psychologist and psychotherapeutist Ansis Jurgis Stabingis.
Quoting Mark Twain: “Giving up smoking? It’s the easiest thing in the world! I’ve done it hundreds of times.” therefore A.J. Stabingis provides a couple of recommendations that may help to introduce a new habit in an easier way (or get rid of the old unwanted habit):
Make proper preparation
Pay attention to related emotions (both positive and negative)
Devote enough time (at least 30 days)
Award oneself for achievements
In case of failure not to give up, but try again. And again.
Information on research
The research was made in the period from 26.03.2009 – 31.03.2009, the research was made by the company “GFK Custom Research” upon GE Money Bank order. Within the research more than 500 respondents were surveyed, obtained data is represenative for the
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