Hyderabad: India’s salaried class is alarmingly underprepared as far as following good personal financial habits and abiding by them both in the short and long term is concerned, an online portal has revealed.
ArthaYantra.com, India’s first integrated online personal financial service company, reached this conclusion after conducting an innovative and analytical research on personal financial habits of middle income professionals.
The survey was conducted among diversified pool of 2000+ salaried professionals working in different industries, with current base of ArthaYantra’s clientele and 200+ Human Resource professionals across different industries and included -
The participants in the survey included entry-level professionals (those with less than six years of work experience); mid-level professionals (with six to ten years of work experience) and senior-level professionals (with more than 10 years of experience).
This research was aimed at analysing current personal financial habits and the effect of such habits on their financial well being in the future.
It covered a wide range of personal finance aspects, including spending patterns of individuals, the primary mode of payments, frequency of analysing the expenditures and surplus, tax planning strategies, status of retirement plan and other relevant personal finance subjects.
On the issue of personal finance readiness, the survey only 2.43 percent professionals with a work experience of one to five years could be rated highly, while in the case of those with six to ten years experience, only 7.19 percent could be rated high on their personal finance readiness.
Only 11.48 percent of the the professionals with a work experience of 10+ years were rated high on their personal finance readiness.
Overall, only 6.75 percent of Indian professionals are financially ready to face challenges in life.
On the issue of retirement planning, the survey found that of employees with work experience of less than five years, only 9.29 per cent have started investing in a retirement plan other than provident fund or other such mandatory retirement related options provided by their organizations.
Only 19.23 percent of employees with six to ten years work experience have planned for their retirement, while 29.63 per cent of employees with work experience over 10 years started investing for their retirement.
Based on the current personal financial habits of the employees surveyed, only 18.64 per cent can afford to retire at the age of 60. This also means that the probability of extending the retirement age is higher for the remaining employees owing to lack of enough retirement corpuses. Even for people who can retire at 60, quality of retirement would be sub-par.
The survey also suggests that the Indian salaried class needs to adapt the concept of having emergency funds that will account for three to six months of expenses.
Currently, 14.22 percent of professionals with a work experience of less than five years have an emergency fund; 44.23 percent of employees with a work experience of six to ten years have an emergency fund.
The result further states the fact that practice of saving money for emergencies does not exist among a large portion of the population.
Based on the survey conducted, only 26.26 percent of the employees are maintaining a healthy frequent track of all their expenses. About 10.61 percent of employees review their expenses frequently. The majority of employees (42.93 percent) review their expenses occasionally, where 20.20 per cent of the employees review them rarely.
This signifies the fact that most of them generally do not keep a track of where we spend and how much we spend.