Market fluctuations and job uncertainties are making people focus on long-term financial goals
The study highlights that people are increasingly taking control of their finances as 76% men and 66% women manage their finances themselves, respectively.
The Covid-19 pandemic, which led to salary cuts and job losses, has affected financial savings of many citizens. Individuals have less money to spend despite putting a break on discretionary expenses. However, the silver lining is that people are reacting to uncertainties with a greater degree of financial planning.
The annual BankBazaar Savings Quotient 2020 report shows that 70% of the respondents are saving primarily for emergencies like medical expenses. The survey reveals that the average wallet share of savings dropped to 32% compared to last year’s 38%. People in the age group of 22-27 continue to be the biggest savers, setting aside almost 35% of their salary. Those in the age group 28-34 and 35-45 saw their wallet share of savings fall to 30.5% and 30%, respectively.
Long-term goals The survey highlights that market fluctuations and job uncertainties are making people focus on long-term goals for self and family, putting aside discretionary goals like luxury and travel. It surveyed 650 respondents (working professionals in 22-45 age group) across five major cities.
Adhil Shetty, co-founder and CEO, BankBazaar, says people are reacting to the uncertainties of the last few months with a greater degree of planning in financial matters. “When you look at the savings data, predictably, emergency savings have become the biggest reason for saving for 70% people as compared to 32% last time. At the same time, as falling returns make an impact, there is increased focus on long-term planning for retirement (46%) and securing children’s inheritance (47%) compared to earlier. We are seeing close to 25% people planning for a corpus of Rs 2 crore, compared to 20% last year. This is a heartening trend, as it points to long-term, goal-based planning that is more rewarding in the long run.”
Investments and retirement The study highlights that people are increasingly taking control of their finances as 76% men and 66% women manage their finances themselves, respectively. While 38% of women trusted elders in the house for their financial planning, 32% men preferred to consult family friends and advisors.
The study also found that the average retirement age across age cohorts continues to remain 56.4 years. However, the average retirement age for people in the age group of 35-45 saw a slight increase from 57.4 years last year to 58 years now.
The study shows that this generation believes in using all available financial products to fulfil their aspirations smartly. Nine out of 10 respondents had some form of credit, be it credit cards or secured or unsecured loans. They are also careful about how they deal with credit as 78% people pay less than 30% of income as EMIs despite having multiple lines of credits open. Interestingly, credit score awareness as well as monitoring remains high, indicating that financially savvy Indians are taking a step towards being future-ready.