Indian Consumers Bounce Back To Financial Freedom: LFI Up By 9 Points Since 2021

After years of uncertainty, especially during the initial post-Covid period, the financial confidence among Indian consumers is bouncing back. The latest Life Freedom Index (LFI) released by HDFC Life shows a picture of consumers getting back on their feet financially.

The study, measuring how secure and prepared people feel about their finances, highlights a 9-point increase since 2021, bringing the total index to 70.8 in 2024.

Beyond numeric growth, this jump also reflects that Indians are gearing up for better financial planning, rebuilding their savings, and taking their future seriously. From young professionals who are just starting their careers to parents juggling family responsibilities, and seasoned investors looking to grow their wealth - the index shows the sentiment of different groups.

With a total sample size of 2076 people aged between 20 to 60 years, the Index was conducted across 15 Indian cities.

The upward movement in the index (currently at 70.8) indicates a bounce-back in consumer sentiment after the pandemic and an overall improvement in terms of confidence in consumers‟ financial outlook.

This upward movement is a result of growth across all of LFI's sub-indices, namely

Financial Planning and Financial Sufficiency and Adequacy indices. However, the study finds that a lower growth has been noted in the Financial Awareness and Familiarity Index highlighting the need for better knowledge of financial products for Indian consumers.

Here’s a Spotlight On Key Findings of this index:

- The standout stories in this year’s LFI report come from Tier-3 cities and working women. The Tier-3 consumers, often overlooked in financial planning discussions, have shown notable growth in confidence due to a better penetration of digital access and financial tools in these areas.

- The study finds that working women, too, are embracing financial independence with a 9.3-point rise in the Life Insurance Confidence Index. Easier access to financial education, along with targeted empowerment initiatives, seems to be the contributing factors behind this change.

- The top priorities of Indian consumers now include their children’s financial security, being physically and mentally fit, and improving their standard of living.

- Interestingly, the Life Insurance Confidence Index rose by 9.3 points in 2024, primarily driven by

growth among working women, salaried individuals, and Tier-3 markets. This highlights that Indians are increasingly realising the importance of Life Insurance in financial planning.

A notable trend is the increasing importance of retirement planning, particularly among the elderly. As longevity increases and traditional family structures evolve, retirement preparedness is no longer optional. The study finds that consumers are factoring in healthcare costs, daily living expenses, and even financial support for dependents while making their financial plans