Impact of financial crisis on Lithuanian households‘ ability to manage budgets

Abstract

Households are important integral part of economic system of every country, therefore the processes related to households‘ budgets and their control are permanently in focus of numerous researchers. Majority of publications are based mainly on fundamental approach to personal finance management and do not specifically target decision making mechanisms in a specific household affected by current, permanently changing conditions on global financial markets or macroeconomic processes in a specific country. The paper presents results from two surveys on Lithuanian households conducted in two different phases of recent 2008–10 crisis in order to study the transformations of financial behaviour, first of all the ability and habits to control the household budgets. Both surveys were carried out using the same sociological tools and technology and specially drafted questionnaires. The results indicate that crisis had certain negative effect on households‘ income, but at the same time had positively influenced the ability of households to manage budget related issues and promoted less spontaneous according to Maslow‘s definition and much more rational behaviour. This result comes from both improved personal finance management skills and psychological factors whoes character was very much affected by crisis.