While financial experts recommend planning one's household expenditures, only slightly more than half of people in Lithuania do so, while another third only plan bigger expenditures. Women more often plan all expenditures, while men tend more only to foresee larger purchases. On the other hand, men invest more than women.
Financial planning steadily increases with age as well as when a family is formed. These personal financial management trends were revealed by a survey of the investment and saving habits of the Lithuanian residents conducted on behalf of INVL Asset Management.
People's propensity to plan evolves over the course of their life
According to the survey data, 52 per cent of the country's residents plan all their household expenditures, 34 per cent plan only larger ones, and a tenth of people do not plan at all. It turns out that women are more careful financial planners, with 57 per cent of them planning all household expenditures versus only 46 per cent of men. The latter more often than women plan only larger purchases (36 per cent versus 32 per cent) or tend not to plan at all (about 15 per cent). There are just half as many women who do not plan expenditures – only 7.5 per cent.
The survey results show that the propensity to carefully plan household finances is also linked to age: people in the 46-and-older age group most often plan all their household expenditures (56-62 per cent), compared to about half of those between the ages of 26 and 45 (45-50 per cent). This latter age group mainly focuses on spending for larger purchases (40 per cent.)
People who are married or live with a partner also more often plan all their household expenditures, with 51 per cent doing so compared with 43 per cent of those who do not have a family. Among respondents who do not plan household expenditures at all, one-fifth are not married, while only 8 per cent of married people fall into this category.
According to Vaidotas Rukas, the Head of Funds Management at INVL Asset Management, the results of the survey reflect the different models of financial decision-making and behaviour at different stages in a person's life. "Experience shows that it's worthwhile paying more attention to planning and managing one's finances as early as possible. Financial literacy should be developed from childhood, and as for financial planning, attention should also be given to investing some amount of one's resources. Long-term saving and investment gives better results and makes it possible to create a more solid financial base in the course of one's life," Vaidotas Rukas stresses.
Among respondents, 15.5 per cent of men and 10.5 per cent of women said they invest. The highest percentages of those who invest are in the age groups of 26-35 and 36-45 (23 per cent and 17 per cent, respectively) and among those have obtained or are pursuing a higher education (20.5 per cent). About 60 per cent of men and women said higher income is what would most encourage them to invest, while roughly a third said they would need a better understanding of financial markets.
Income level and profession have an impact
The survey showed people's attention to planning their money also varies with income levels. Those with monthly income per household member of 200 to 300 euros are the most likely to plan all expenditures, with 57 per cent doing so. About half of residents with income of 301-500 euros per household member plan all expenditures. The group with the highest income (more than 500 euros a month per household member) also has the largest number of people who only plan large purchases – more than 41 per cent. The largest percentage of people who do not plan their expenditures at all, 14 per cent, is in the group of respondents with the lowest income.
"People's responses suggest households spend quite a lot of their money spontaneously, planning mainly for larger purchases. That means they could potentially find themselves in situations of not having enough money for essential expenditures or financial obligations. Careful control and management of personal finances not only lets you avoid complicated financial situations, but at the same time offers the chance to set aside more money to save and invest for one's own and one's family's future. That of course requires resolve and personal motivation," Vaidotas Rukas notes.
Analysis of respondents by occupation shows that the most thorough financial planners are farmers (58 per cent), office workers (55 per cent) and pensioners (63 per cent), while nearly a third of students and pupils do not plan expenses at all. The representative survey of investment and saving habits was conducted on behalf of INVL Asset Management by the research company Spinter Tyrimai, which interviewed 1,011 Lithuanian residents aged 18 to 75 in February this year.
INVL Asset Management is one of the leading asset management companies in Lithuania. The company runs eight pension funds and five mutual funds. It is part of Invalda INVL, one of the Baltic region's leading asset management groups. Companies in the group manage pension and mutual funds, alternative investments, individual portfolios, private equity and other financial instruments. They have 340 million euros under management, entrusted to them by more than 150,000 clients in Lithuania and Latvia as well as international investors.