Latest articles on Life Insurance, Non-life Insurance, Mutual Funds, Bonds, Small Saving Schemes and Personal Finance to help you make well-informed money decisions.
Time and again we have seen reports and surveys depicting low levels of financial literacy in India.
A survey conducted by Aviva Life Insurance Company—Aviva Plan India Plan Survey 2017—says that Indians are big dreamers, but poor financial planners. The survey consists of 2 indices: the Dream Index, which shows how aware Indians are of their life goals; and the Plan Index, which is about how well financially planned Indians are to achieving their life goals.
The Dream Index for the topmost tier of Indians stands at 61, while the Plan Index stands at a dismal 24. Clearly indicating that whilst we dream big, the real action planning with regards to ascertaining the fulfilment of the dreams, is poor. “For many years, India was a protected economy. Investments were made based on tax benefits and not product benefits. For example: insurance was bought not for life cover, but premium required to save tax,” said Lovaii Navlakhi, founder and chief executive officer, International Money Matters Pvt Ltd, a Bangalore based financial planning company.
The survey also reveals some interesting facts that are contrary to popular beliefs such as: Indians in the 25-29 year age group are most aware about financial investments. Millennials score 31 on Plan Index, compared to the All India score of 24. On the other hand, contrary to popular belief, women are catching up fast with men on financial planning. Women score 19 on Plan Index against 25 scored by men.Also, couples without kids are doing better financial planning compared to couples with kids. Couples without kids score 31 on Plan Index, contrary to 21 for couples with kids. The survey found that those belonging to SEC (socioeconomic classification) B are better at financial preparedness than those belonging to SEC A. Typically, SEC A is considered a higher category than SEC B. Besides that, higher income doesn’t drive significantly better financial acumen either. The survey found that people earning more than Rs1 lakh a month are not necessarily better financial planners. They scored 59 on the Dream Index compared to 61 for all of India. Navlakhi suggest that to improve financial literacy, “It should me made part of curriculum starting from middle school, but that is a long-term fix to a problem looming in the short term. Media does play a role in spreading financial awareness, and case studies of how planned individuals did better than those who acted ad hoc, or not at all, need to be published is one thought.”
Methodology
The survey includes respondents from Delhi, Mumbai, Kolkata, Patna, Jaipur, Ahmedabad, Hyderabad, and Bengaluru. It targeted people who belong to SEC groups A and B. The survey reach out to 5,572 people. It targeted those between the ages of 25 and 45 years, and included men and women. The method of collecting responses was face-to-face interviews using a structured questionnaire.
Industry News