OREANDA-NEWS. October 20, 2009. Almost half or 44% of Latvian residents with monthly income over 400 lats admit that they are not able to give up spending in favour of their financial security. In addition almost the only one used savings method is saving a specific sum of money at the beginning of the month, concluded in GE Money Bank research, reported the press-centre of GE Money Bank.
 
When asked about the missing qualities to start saving or saving more, 44% of residents said that it’s an ability to give up something. 22% mentioned a lack of discipline and 17% - a lack of determination.
 
It was revealed in the research that out of all Latvian regions residents of Latgale more often lack determination. Residents of Zemgale conclude that they would be able to make bigger savings if they were more disciplined while on average the least number of Kurzeme residents agree to the statement that they lack ability to give up something to be able to save.
 
Despite in Q2 volumes of savings by residents increased by 10%, nearly 40% of Latvian residents still can be classified as spenders according to the resident habits matrix by GE Money Bank. Exactly this group’s representatives have changed their attitude to savings the least and they also are the ones who try to change their way of living in favour of long-term financial stability the least.
 
“First of all one should set one’s life goals, identify priorities and in the end undertake responsibility for one’s own life to be able to give up something in favour of financial security, develop one’s determination and discipline. If there is a goal in one’s life, it becomes clear what to give up and what to create savings for, discipline oneself as regards personal expenses, and control impulsive wishes to satisfy moment caprices. One should learn to look for and find one’s own solutions, make independent decisions rather than copy something or follow strict preconditions,” considers the psychologist and Money Planning Centre expert Ilze Dreifelde Gabruseva.
 
Already in the research at the end of March this year it was clarified that after making compulsory payments (including food and transport) 42% of residents has 101-400 lats a month left for other expenses (e.g. shopping, entertainment, sport, etc.). It was also concluded that people least of all would be willing to give up exactly shopping, similar 37% and 32% wouldn’t like to reduce their expenses on culture events and their car.
 
Most popular method – saving a definite sum every month
Half of respondents (51%) admit that they don’t have a definite method of savings, though they make them. At the same time on average every fifth (21%) respondent says that a definite sum goes to savings every month right after a salary is received.
 
“One of the most common savings methods is allocating to savings 10% of monthly income. Though perhaps that’s exactly the reason why many people still don’t make savings – this sum may seem too big at first sight. But one should remember that at the beginning these don’t have necessarily to be 10%, it can be a smaller sum. While for someone else it is easier to allocate to savings, for example, 3 lats every day or 10 lats every week. For someone else savings won’t become a burden if he or she changes these methods every month.

The research shows that users of saving accounts are the most well disciplined savers as more than half of them or 56% regularly on a monthly basis allocate some money to savings. It’s because savings account is flexible savings method. It is possible to increase the account even every day, as well as money is available all the time. GE Money Bank saving account “Account of Opportunity” combines these qualities with a unique opportunity to withdraw cash at any time of the day if necessary, as well as it is a great opportunity to earn interest” explains Aleksandrs Cernagins, GE Money Bank Savings and Investment Products manager.
 
Psychologists’ advice – to develop an ability to save, one must be able to:
say „No” to one’s and other moment caprices;
be courageous to refuse others (for example, a loan, to pay for others entertainment etc.);
find out personal self-assessment sources as a person quite often wastes money because of a wish to demonstrate a personal status and power;
learn to concentrate one’s will on realization of specific goals;
realize how money fulfils „relations instrument” function (for example, instead of spending time with children or your partner we buy expensive gifts);
develop patience, ability to wait as “nothing happens at once”.
 
Research information
The company “GFK Custom Research” made the research by GE Money Bank order. Within the research more than 400 respondents were surveyed, the obtained data are representative of the Latvian society with net income over 400 lats a month.
 
On GE Money Bank
AS GE Money Bank is part of General Electric that according to Forbes Global 2009 is the largest multibranch company in the world. At the same time GE Money Bank is highly capitalized and ready for future economic challenges: on 30.06.2009. bank’s capital adequacy ratio is higher than banking sector’s average – it exceeds 20% (the Financial and Capital Market Commission (FCMC) requirement is 8%), but the liquidity ratio is 65.3% (FCMC requirement is 30%).