- The analyst recommends efficient handling of finances and control of expenses.
- It is important to create a financial reserve to cover unforeseen situations.
- The investment potential of Slovak households is not fully utilized.
The ongoing consolidation of public finances, energy prices, developments in world markets or trade tensions and rising tariffs can push the prices of goods and services up. Rather, slower economic growth, a slight increase in unemployment and slower real wage growth are expected. This is also why it will be extremely important to handle money as efficiently as possible, emphasized Wood & Company analyst Eva Sadovská.
In this context, according to her, it is necessary to get the family budget in order. “Many Slovaks still have a tendency to manage from paycheck to paycheck and rely on the feeling that financially it will “somehow work out”. According to Eurostat data, up to 10% of Slovaks have trouble making ends meet. But it doesn’t always have to be just because of lower incomes. Inadequately high expenses can be a problem,” the expert pointed out.
He therefore recommends that households practice monthly “financial inspections”. “Most of us all have an overview of the amount of the salary, it’s worse with expenses, especially everyday ones. Monthly income, as well as all expenses, should have their place in a table or application. Thanks to this, we can detect leaks in the amount of 10 to 15% of the monthly budget,” calculated Sadovská.
According to her, the creation of a financial reserve is also necessary. This is easily available money, stored for example in a regular bank account, which can be used immediately or in a short time. “In general, it is recommended to have a reserve of three to six monthly expenses. It is true that the more unstable the income, the larger the reserve the household should create,” she added. According to her, the key is to regularly set aside a certain amount, for example in the amount of 5 to 10% of the income, which will become a natural part of the family’s financial regime.
The analyst also pointed out that cash and deposits make up 45% of the total financial assets of Slovak households. The purchasing power of this money is gradually decreasing as a result of inflation. The long-term solution is investing. “However, the share of investments in bonds, shares, ETFs or mutual funds is relatively low. In 2024, it represented only 25% and its level has practically not changed over the last decade. Slovaks do not use their investment potential to the full,” stressed Sadovská.
According to her, it is ideal to start investing as soon as possible. “The effect of compound interest plays a big role over time. Starting to invest regularly with 20 euros at the age of 25 is much better than starting to invest 100 euros at the age of 40.” explained the expert.
According to her, education in the field of financial literacy is also important. One of the obstacles to investing is precisely the weaker knowledge of Slovaks. She reminded that the index of investment literacy, prepared by the investment platform of the Port, reached a value of 94.4 in Slovakia in 2024, which was the lowest level in four years.
“Calculating percentages or the principles of compound interest cause us problems. Quite often, we do not realize that the returns when investing are not guaranteed. However, certain shortcomings were also manifested in the case of currency exchange conversions,” added Sadovská.
