16.02.2026
High inflation and economic uncertainty in recent years have led many people to evaluate their finances more critically. Now, as incomes may increase through the removal of the tax wedge, salary raises or tax refunds, many face the question of how to use the additional money in a way that also improves long-term financial security.
According to LHV, over the past year the number of their clients directing additional income to savings or investments has grown by nearly 4%, while more than half of people continue to live without a financial buffer.
Economic downturns and recoveries are part of the normal economic cycle, and decisions made during better times determine how vulnerable one will be when the next difficult period arrives. If in recent years inflation and tax increases have eaten up a large part of the monthly budget, then even with a smaller income increase it is worth directing at least part of the additional money to savings or investments to create a financial buffer. According to Annika Goroško, the Head of Retail Banking at LHV, a reserve equal to at least 3 months of expenses provides peace of mind both in the event of unexpected job loss and a broken washing machine.
Goroško notes that building a financial foundation is generally always a longer process, the success of which depends on small but important steps. ‘If a person has high-interest consumer loans or hire-purchase, it is worth considering repaying them faster, because this has a quickly noticeable impact on the monthly budget. Equally important is the existence of a peace-of-mind fund, because even a small financial buffer helps avoid new obligations in the event of unexpected expenses and reduces money-related stress,’ she explains.
Based on the bank’s experience, approximately 65% of clients use tax refunds primarily to cover everyday expenses or larger purchases, while only 35% consciously direct them to savings or investments.
According to Goroško, simple and consistent steps are decisive when creating financial security. Automation, such as rounding card payments or standing orders to the Savings Account on payday, helps maintain accumulation. ‘People are often surprised at how large an amount can accumulate over months. Equally important is defining the goal, whether it is a peace-of-mind fund, a trip, a home down payment or long-term investing. We see that, for example, the number of users of automated saving solutions grew by nearly 22% in 2025 compared to 2024,’ she explains.
Additional income from the removal of the tax wedge or from tax refunds can also improve a person’s sense of financial security if used wisely. Small but consistent decisions have a greater impact in the long run than occasional impulse purchases. ‘There are always many everyday expenses and temptations, and we tend to postpone actions for the future. Although the slogan ‘you only live once’ often sounds more tempting than talk of pensions or savings, most people want to live without constant financial worry. Behavioural habits are the surest way to achieve this,’ Annika Goroško notes.
Investors should be especially attentive
As financial literacy grows, more people have begun investing in addition to saving. ‘Although we are generally used to a pre-filled tax declaration, where only a few clicks are needed, in reality everyone, but especially investors, should be much more attentive when submitting their income declarations,’ Goroško emphasises.
According to Goroško, LHV has also highlighted transactions with an asterisk in the Tax Report, which it wishes to draw attention to so that the client understands their nature for tax purposes and declares them correctly. ‘These may be transactions that are not standard, such as securities transfers without payment or corporate events.’
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