One third of households had to spend their savings

It is possible to build up a financial reserve from little to no money, according to experts.

Illustrative stock photoIllustrative stock photo (Source: Unsplash)

Due to the economic crisis caused by the coronavirus pandemic, many families were forced to spend some of their savings to make ends meet.

Experts emphasise that it is necessary to save also during hard times.

“We know from our own experience that almost always, one can find some extra money in the family budget,” said Andrea Straková, an expert on personal finance from Partners Group SK, as quoted by the TASR newswire. “It does not have to be a great sum, but it is possible to save a little money in hard times too.”

Financial reserve of six monthly incomes

Finance experts recommend that families should have a reserve of six monthly incomes in order to overcome difficult financial times.

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“For many, it is an unimaginable task and sum,” Straková noted. “But we need to realise that the financial reserve is not created from one day to another or from one month to another. It is ideal to develop a habit for saving and keep at least 10 percent of your salary every month.”

The latest poll of the Partners Foundation and Focus polling agency showed that the first wave impacted the finances of 44 percent of Slovak households.

More than half counted on the fact that in June, the situation would not change or worsen.

One third took from the savings

The poll also showed that one third of households was forced to spend their savings stored at home or in saving accounts in banks.

“A positive result from the polls is that 78 percent of households save for worse times,” Straková said.

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From that figure, 20 percent of families have the ideal reserve of six monthly salaries, 24 percent have saved two to five monthly salaries and 16 percent have a reserve of up to two monthly salaries.

“If families lose their financial reserves during those difficult months, it is necessary to create it again,” Straková said. “It is possible to start with a minimum amount or from zero.”

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