This Is How India Saves And Why

There’s something deeply personal about how we save money. In a country as diverse as India, savings are not just about numbers on a balance sheet but about dreams, security, and ambitions wrapped in culture and a traditional approach to organising one’s finances. The 2024 BankBazaar ‘MoneyMood’ report finds that while a majority of Indians continue to take the traditional route for their savings, many are learning the alternate ways of saving via investing in markets, how? Let’s find out. The study surveyed 1529 respondents, working as professionals, aged between 22 and 45 years from six metros and 18+ Tier 2 cities.

Where India Saves

Picture this: a majority of respondents, 67 per cent, keep their savings in a good old savings bank account. It’s a classic move, blending convenience with a sense of safety. It’s where most people know their money is just a swipe or a withdrawal slip away.

However, many are learning not just to park their money in bank accounts but to ‘compound’ their way to wealth. Around 62 per cent of savers choose mutual funds for their promise of compounding wealth. Conversely, Systematic Investment Plans (SIPs) are becoming a favourite of small investors, allowing them to tiptoe into the markets without the fear of losing everything in one swoop.

Followed by these, fixed and recurring deposits are held by 57 per cent of respondents, mostly preferred by risk-averse savers. For senior and super senior citizens FDs are typically the most sought saving method where the certainty of 6-7 per cent interest is worth more than the high returns and jitters of the stock market.

Coming to the stock market, a majority of 40 per cent of savers are dipping their toes into equities. This is an indication of growing financial literacy and appetite for risk. Meanwhile, insurance products like LIC policies and Unit-linked Insurance Products (ULIPs) are preferred by 37 per cent of respondents.

And let’s not forget, that just 0.9 per cent of surveyed professionals have not invested at all. That’s less than one in 100 people, a testament to how saving and investing have become ingrained in our collective psyche.

This is how Indians are saving when it comes to other diverse saving options;

Gold and Other Commodities: 30.0%

Provident Fund (EPF/PPF): 29.0%

Real Estate (Residential / Commercial): 24.0%

Small Savings (Kvp, Nsc, Scss, Ssy, Pomis): 12.0%

Government Securities: 12.0%

Cryptocurrency: 11.7%

Corporate Fds, Bonds, Debentures: 11.0%

New Age Savings Tools Such as P2P: 6.6%

NPS: 5.7%

Forex: 2.0%

Why India Saves

The reasons behind these choices are as compelling as the choices themselves. When asked why they save, 61 per cent of respondents pointed to emergency expenses. It’s a lesson learned from life’s unpredictability, amplified by events like the pandemic. The comfort of having a financial cushion for the unexpected - a hospital bill, or a sudden job loss - is priceless.

Close on its heels, at 48 per cent, is saving for children’s well-being and inheritance. In India, the future of the next generation is often the present generation’s biggest investment. Be it funding education, marriages, or leaving behind a nest egg, this reflects the enduring familial bonds.

Generating income and capital gains motivates 47 per cent of savers. This group—often younger, urban, and financially literate, views savings not just as a safety net but as a stepping stone to wealth creation.

For many, lifestyle upgrades (44 per cent) and travel (42 per cent) are also top reasons to save money after setting aside expenses for day-to-day needs. It’s a nod to a growing middle class that aspires to live life king-size, from upgrading gadgets to ticking off bucket-list destinations.

Additionally, retirement planning inspires 31 per cent of respondents to save, showing a shift towards individual financial accountability as traditional joint family systems give way to nuclear ones.

And then there are the 28 per cent who save for luxury spending, perhaps a designer handbag, a premium car, or a dream wedding. Another 27 per cent prioritise upskilling, investing in themselves to earn more tomorrow.

The Big Picture

India’s saving story is a reflection of its people: diverse, rooted, and evolving. From saving in ‘gullaks’ to the cryptocurrency portfolio managed on an app, the landscape of savings is changing. But the underlying motives remain timeless, i.e., security, family, growth, and dreams.

This is how India saves and why: with a foot in tradition and an eye on the future.