The BankBazaar Savings Quotient 2020 reveals that the average wallet share of savings dropped to 32 per cent from 38 per cent last year as more than 70 per cent of those who were surveyed chose emergency expenses – medical or otherwise – as the primary reason to save during the pandemic.
The BankBazaar Savings Quotient 2020 (BAI 2020) is a follow-up to the BankBazaar Aspiration Index 2020 released in July. While BAI 2020 attempted to understand the aspirations of Indian working professionals, the Savings Quotient presents a reality check on their perceived capability to achieve it by presenting a coherent picture of their financial habits.
Consumer inflation
The survey, conducted in July, had 650 respondents aged between 22 to 45 years from five cities, including Chennai, Mumbai, Delhi, Hyderabad and Bengaluru. The survey reveals that savings have shrunk against the combined onslaught of the recession, pandemic and lockdown. Higher consumer inflation, coupled with job losses, paycuts and furloughs, means people have less money to spend, despite putting a hold on discretionary expenses.
Unsurprisingly, the drop in savings was highest among the core earners: the Moneymooner aged between 28-34 years and Wealth Warriors aged 35-45 years, who faced the brunt of the slowdown. Moneymooner saw their wallet share of savings fall by 7.5 per cent to 30.5 per cent from 38 per cent. The Wealth Warriors followed closely, as their savings fell from 37 per cent of their income last year to 30 per cent this year – a steep fall of 7 per cent. The Early Jobbers were comparatively better off, with an average wallet share of 34.7 per cent, a drop of 5.3 per cent.
“Data showpeople are reacting to the uncertainties of the last few months with a greater degree of planning in financial matters than before. When you look at the savings data, predictably, emergency savings have become the biggest reason for saving for 70 per cent people versus 32 per cent last time. At the same time, as falling returns make an impact, there is increased focus on long-term planning for retirement (46 per cent) and securing children’s inheritance (47 per cent) compared to earlier. We are seeing close to 25 per cent people planning for a corpus of ₹2 crore, compared to 20 per cent last year. This is a heartening trend as it points to long-term, goal-based planning that is more rewarding in the long run,” said Adhil Shetty, co-founder and CEO, BankBazaar.
The survey emphasizes that this generation believes in using all available financial products to fulfill their aspirations smartly. More than 89 per cent of those surveyed had some form of credit, be it credit cards or secured or unsecured loans. At the same time, they are also very careful about how they deal with credit. Data showthat 78 per cent people spend less than 30 per cent of income as EMIs despite having multiple lines of credits open.
BankBazaar is a neutral online marketplace that gives instant customised offers on loans and credit cards. It also provides free consumer credit score on its portal. Over 50 of India’s leading financial institutions have chosen to integrate themselves with the platform. BankBazaar has so far raised $ 116 million in funding from investors such as Experian, WSV, Eight Roads, Sequoia Capital, Walden International and Amazon.