Not prepared for job loss, debt repayment is a big worry: Survey

Financial planners have for long pointed out that lack of awareness to plan for contingencies and emergencies is a big in people’s financial plan.

Indians aren’t adequately prepared for a financial crisis. That’s the key takeaway of a survey among 4,289 people from  diverse backgrounds, conducted by Finsafe India, a firm specialising in financial education. The good news is that more people are concerned about planning for their long-term goals.

Financial challenges 

In the survey, 67 percent of respondents said they were concerned about planning for long-term goals such as retirement and children’s education. “This indicates a strong focus on future financial security and the importance of saving and investing for significant life milestones,” said Mrin Agarwal, Founder and CEO, Finsafe India.

About 53 percent of respondents said they were worried about not being prepared for expenses in case of job loss. Nearly 26 percent of respondents said that they were concerned about supporting their elderly parents. This reflects the challenges of the sandwich generation, who may be simultaneously supporting ageing parents and their children.

According to the findings,  debt repayment is a critical issue for 29 percent of the respondents , impacting their financial health and ability to achieve other financial goals.

Savings gap

The survey's results show that 55 percent of respondents save 20 percent or more of their income, while 45 percent save less than 20 percent, or not at all (see graphic). “This suggests rising lifestyle expenses in a generation that believes in living for today rather than saving for the future,” said Agarwal.

A significant (and worrying) 13 percent do not save at all because of loans, underscoring the significant impact of debt on financial stability.

Medical emergency

Nearly 77 percent of respondents aren’t prepared for medical emergencies. They either depend solely on employer-provided health insurance to cover their hospitalisation bills, or are simply under-prepared. Financial experts have long pointed out that lack of contingency planning  is a big hole in people’s financial plans. “A considerable portion of the population could face severe financial distress in case of an emergency,” said Agarwal.

Investment preferences

Increasingly, more corporate employees are shifting to equities and equity mutual funds. According to the survey, nearly half the respondents are willing to invest in mutual funds and stocks, while about a third prefer more traditional fare (fixed deposits and insurance), highlighting varied risk appetites (see graphic). “While it is good to see higher adoption of market-linked financial instruments, financial education has a big role to play in ensuring that people develop good financial habits,” said Agarwal.

The presence of respondents with diversified portfolios shows a growing awareness of risk management strategies, which can be further encouraged and expanded, adds Agrawal.

About 35 percent of the respondents said they were unsure of where to invest.

The financial skills India seeks

The survey identified several areas where corporate employees seek further knowledge and understanding. There is a strong demand for comprehensive financial planning and long-term financial management advice (see graphic). “With increasing uncertainty over generative AI and other technological advancements that threaten many jobs, the need for diligent financial planning is higher than ever,” explains Agarwal.

Further, most individuals recognise the importance of saving more in order to have a comfortable life, and are looking for practical advice on how to budget and save money effectively.

The respondents mentioned that they want to learn more about mutual funds and tax strategies. “It's good to see more people viewing mutual funds as a core savings vehicle for financial goals,” said Agarwal. As inflation is driving up the cost of life goals, understanding mutual funds and tax optimisation are key to achieving one's aspirations, she asserts.

In sum

The financial landscape for Indian employees is undergoing significant transformation, marked by new challenges and emerging opportunities. The report highlights a workforce keen on securing its financial future but often lacking the sophisticated tools and expertise needed for sustainable financial management. “By evangelising comprehensive financial education and wellness programmes, employers can play a pivotal role in empowering their workforce,” said Agarwal.