07.03.2025
A striking 73% of Estonians have noticed their ability to save shrinking over the past two years, reveals a recent survey commissioned by LHV and conducted by Norstat. The number of people able to set money aside has significantly dropped, with one in two Estonians struggling to save as much as before.
‘The decrease in saving capacity is especially hitting those with lower incomes,’ Nelli Janson, the Head of Investor Community at LHV, said. The survey showed that a staggering 80% of people earning under 750 euros a month are saving less than they did before. The research also uncovered generational differences – the older one is, the more noticeably their wallet is tightening. ‘Young adults living with their parents tend to spend less, while families with children are facing an overwhelming rise in expenses, and pensioners are struggling the most,’ Janson commented.
Regardless of age, savings form the foundation of financial security. The universal advice is to build an emergency fund that can cover at least three months of expenses. Janson explained that while the rapidly rising cost of living is putting significant pressure on household saving capabilities, having a financial buffer is essential to weather unexpected situations. ‘Of course, everyone’s financial situation and goals are different, but it is never too late to start saving,’ Janson emphasised. Time, after all, is the greatest ally of an investor – the earlier you start, the longer your money can work for you. ‘Thanks to compound interest, even small investments over a long period can build a substantial portfolio. The most important thing is to start and stay consistent,’ Janson said.
The decline in savings could lead to long-term negative consequences. Unexpected expenses may increase debt burdens, limit future investment opportunities or force compromises in everyday needs, including health and education. ‘Building a saving habit helps people navigate life’s twists and turns, whether it involves healthcare costs, job loss or even the need to replace a leaking roof. In today’s economic climate, it is crucial to critically evaluate your spending and find ways to save,’ Janson noted.
She encourages people to thoroughly review their budget and analyse where their money is going. Tracking expenses provides a clear picture of which categories are taking the biggest bites out of the monthly budget. Once you have a grasp on your costs and potential savings, it is time to consider building small but impactful saving habits that will secure your future.
Janson pointed out that people often shy away from long-term decisions, and tricking your brain into adopting such habits can be a real challenge. ‘Evolutionarily, we are wired to prefer immediate rewards because it was key to survival in the past. The mammoth was eaten as soon as possible, not saved for tomorrow. Thousands of years later, our brains still lean toward short-term pleasure over long-term gain. Yet, it is precisely the presence of savings that allows a person to take control of their future. Therefore, it is worth experimenting with ‘invisible’ saving methods. A great way to start is by setting up regular, automated contributions to a savings plan,’ Janson said.
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