Indians Prioritise Savings; Tier-2 Citizens Keen On Saving More: Report

A sure-shot buffer against emergencies and economic uncertainties, ‘savings’ plays a crucial role in ensuring the financial stability of individuals. Around 72 per cent of Indians earning a monthly salary of Rs 50,000 or above are “actively” saving, according to a Moneyview Savings Index 2024. People living in Tier-2 cities show strong motivation towards savings, wherein 83 per cent say that 'they save regularly each month'. The survey, conducted among 5,000 respondents each across Tier-I, Tier-II, and Tier-III cities, surveyed people from varied demographics and occupations.

Around two out of five individuals said that saving is a key financial priority for them while as many as 63 per cent said they are able to save monthly.

Savings per Income

Income levels significantly influence the saving habits of people. Over 70 per cent of those earning above Rs 50,000 per month are actively saving, the report states. This shows the obvious that people with higher disposable incomes are able to save more in comparison to those among lower pay grades.

Savings per Age group

The report highlights that ‘age’ also plays a crucial role in the saving behaviours of people. While individuals above 30 years old tend to save around 25 per cent of their income, those below 30 are able to save only 10-15 per cent. “This disparity can be attributed to varying financial responsibilities and life stages, with older individuals typically prioritizing long-term financial security,” the findings say.

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Allocation of income: Share of wallet

Spending habits and needs highly affect the capacity of an individual’s savings. The report finds that people earning below Rs 25,000 per month are able to save and invest only 10 per cent of their income. They allocate almost 50 per cent of their salary towards household expenses, and 25 per cent towards EMIs leaving limited disposable income.

Those earning above Rs 25,000 are spending 35 per cent of their income on household expenses, and 15 per cent on EMIs, while 25-35 per cent goes towards investments and savings. This difference highlights the financial flexibility enjoyed by higher-income groups.

What are people saving for?

A significant 75 per cent of respondents have specific saving goals, although timelines vary. About 3 out of 10 respondents lack a specific timeline for their savings goals, indicating a need for more structured financial planning.

Future property acquisition ranks highest at 21 per cent as a prominent reason why people prioritise savings. This is followed by education and emergency funds at 17 per cent, while marriage expenses and child education are also some of the notable purposes.

Where are they saving money?

Lower-income groups tend to save in their bank accounts, favoring the security of these options; Higher-income groups, on the other hand, prefer fixed deposits (FDs) for their savings, balancing safety with higher returns. This shows that the investment preferences of individuals vary based on their income levels.

Most respondents show a disciplined approach to financial planning, with 63 per cent of respondents saving monthly. This regular saving habit is a positive indicator of growing financial discipline among Indians.

Why are people in Tier-1 cities saving more?

83 per cent of people living in tier-2 cities save regularly each month, showing a stronger inclination towards saving.

Citizens living in Tier-2 cities are able to save more because of a combination of factors, such as lower living costs compared to major metropolitan areas, and a growing awareness of the importance of financial security.

The correlation between income levels and savings rates, saving behaviour in Tier-2 cities, and the varied investment preferences across income groups shows the complex financial situation of an average earner in India.