Photo: Bloomberg
Photo: Bloomberg

Saving like an Indian millennial

Millennials in India tend to save slightly more than others, data from the latest round of the YouGov-Mint Millennial Survey show

Over the past few years, India’s declining savings rate has been a puzzle for macroeconomists. Some have blamed slow rise in household incomes for this. Others have suggested that India’s changing demographics may be to blame, with younger Indians saving less than their parents did.

However, fresh data from the latest round of the YouGov-Mint Millennial Survey shows that among urban India’s working population, the younger age cohorts tend to save a higher share of their incomes than their older counterparts. The savings patterns of post-millennials and millennials are similar, the data show.

Millennials refer to those who have attained adulthood in the early twenty first century, and grew up at a time when the world increasingly became digitally connected. In this analysis, millennials refer to those born between 1981 and 1996 (aged 23 to 38 years now). Those born after 1996 (aged 22 years or below) are referred to as the post-millennials or Gen Z. The rest have been classified as pre-millennials. Together, millennials and post-millennials account for roughly half of India’s adult population.

More than age, income differences affect saving patterns. Among millennials, a third of those earning more than 75,000 per month were able to save more than 20%. Among those earning less than 30,000 per month, less than a tenth were able to do so, the survey showed. Financially secure millennials and professionals with higher technical degrees (MBA/MD/PhD) were able to save more than others, the data show.

The third round of the YouGov-Mint Millennial Survey was conducted online and solicited the views of 9,324 respondents across 180 towns and cities. Of these, 4908 were millennials, 1888 pre-millennials, and 2528 post-millennials. The YouGov-Mint Millennial Surveys aim to examine the attitudes and outlook of India’s digital natives. The analysis of savings behaviour is restricted to only the working respondents of the survey.

The youngest age-group, of post-millennials, has relatively more erratic saving habits compared to millennials. A similar proportion of millennials and pre-millennials said they saved regularly. The corresponding proportion among post-millennials was lower.

When it comes to reasons for savings, there is a stark difference across generations. A majority of pre-millennials (57%) said they were saving for retirement. Among millennials, the share was significantly lower (40%), and among post-millennials, only a small minority (17 percent) said they are saving for retirement.

Pre-millennials are also much more likely to save for contingencies (health shocks, job-loss, or other emergencies) compared to any other age group. A higher share of pre-millennials (46%) also said they were saving to fund their children’s education. 35 percent of millennials also cited the same reason for saving money.

Post-millennials and millennials are also more likely to save for their own education, compared to pre-millennials. Across age-groups, a similar proportion said they were saving for travel with pre-millennials saving only slightly more. Interestingly, when it comes to actual travel spending, post-millennials outspend others.

Millennials are much more likely than any other age group to save for purchasing assets such as apartments and cars or to purchase white goods and electronic gadgets, the data show. Richer millennials are much more likely to save for retirement or for contingencies compared to poorer millennials. In fact, the proportion of richer millennial respondents who said they saved for retirement or contingencies is quite similar to the proportion among pre-millennials who saved for the same reasons.

Across generations, there is a big gap between what people want to save and what they end up saving, and this gap is higher for those with lower incomes, the survey shows. About a quarter of respondents earning less than 30,000 per month said they wished to save more than 20% of their income but less than a tenth did so. Among those who earned more than 75,000 a month, 50% said they wished to save more than 20%, and 34% actually did so.

Across generations, people wished to save more than what they did, and are not able to do so because their current income does not leave for high savings after meeting routine expenses. This is yet another piece of evidence which suggests that an income boost is needed to raise the savings rate. When people perceive incomes going up, and expect incomes to remain buoyant, they are more likely to save and invest more.

This is the fourth of a five-part data journalism series on how millennials are coping with the economic slowdown

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