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More than a third of people who invest aim to save for their children’s education

The share of Lithuania residents who invest with the goal of saving up for their children’s higher education has risen sharply in the last two years. This year 35% of people who invest stated that goal, compared to just 16% two years ago. The change was revealed by representative surveys of Lithuanian residents conducted by Spinter Tyrimai for INVL Asset Management, one of Lithuania’s leading asset management companies.

Ever more people are saving for their children’s education

For the last two years people in Lithuania who invest have rated saving for their children’s education as the third most important goal after saving for retirement and having extra income besides their primary earnings, according to survey data. Two years ago, 16% named that goal, while last year 31% did so and this year the figure rose to 35%. The overall share of people in the country who invest, meanwhile, grew from 13% in 2016 to 16% last year and 17% this year.

“The fact that more and more people who invest want to save for their children’s higher education shows there is a growing need for quality education. The choice is a long-term investment in several senses. On the one hand, if you start saving when children are still small, you can accumulate over a quite long period, a dozen years or more, regularly putting aside smaller amounts than if you invested over a shorter time. On the other hand, investing in one’s children’s education gives a long-term return, giving them a better future and a stable financial situation in the future,” said Dr Dalia Kolmatsui, Head of Pension Funds & Retail at INVL Asset Management.

She said a new trend is also noticeable, where people who are saving up for their children’s future every month put aside the so-called “child benefits” they receive, thus investing regularly in their offspring’s future.

Looking at the responses of both people who invest and those who do not, the goal of saving for their children’s education was more often mentioned by those age 36-45, those with the highest level of education, those with the biggest incomes, and people who are married or living in an unregistered marriage.

There was little difference in terms of place of residence. Similar shares of people stated this goal among those living in big cities, smaller towns and rural areas. In terms of occupation, top and mid-level managers and homemakers stood out with the largest shares of respondents naming this goal.

Not planning for education costs brings the risk of financial shock

“The growing share of people saving for their children’s higher education also shows that people are planning their long-term finances more. It’s great to see that trend, since if you don’t plan for this type of expenses, someone in the family going off to college or university can cause a financial shock in the life of the family, if they weren’t prepared for that and hadn’t saved up the necessary money,” Dr Kolmatsui said.

She noted that not everyone manages to get a publicly financed place at a higher education institution. The statistics for recent years show that more than a third of the students who are admitted in Lithuania have to pay for their studies, and some people of course also choose paid studies abroad.

“The cost of college or university studies in Lithuania, depending on the field chosen, can range from approximately a couple of thousand to more than ten thousand euros a year. So the total amount for four years of studies or more can be quite imposing. And you also have to consider the student’s everyday expenses and the cost of accommodation if they’re studying in a different city,” the specialist noted.

According to the survey which was performed, as regards the goals of people who invest, this year 64% said they aim to save up money to have extra income besides their primary earnings, 60% are saving for retirement, 35% for their children’s education, 17% for a home, and 6% for a car.

Spinter Tyrimai conducted representative surveys of the investment and saving habits of people in the country, on behalf of INVL Asset Management, in February of 2016, 2017 and 2018. For the surveys, 1011, 1011 and 1006 Lithuanian residents aged 18 to 75 were interviewed, respectively.

INVL Asset Management, which is part of the Invalda INVL group, manages 2nd and 3rd pillar pension funds and mutual funds as well as alternative investments and individual portfolios. Over 190 000 clients in Lithuania and Latvia and international investors have entrusted the Invalda INVL group’s companies with the management of more than 600 million euros of assets.

Note: When referencing these survey results, please indicate the source.