Indian households express cautious outlook for 2014, says study
Moneylife Digital Team 05 February 2014

According to the Principal Financial Well Being Index study, overall 77% of respondents in India feel that the prices of groceries, fuel and other household items will go up in next one year and affect their budgets seriously

Principal Retirement Advisors (India) has said that Indian households are concerned with rising fuel and food prices, inflation and unemployment for 2014. The Principal Financial Well Being Index study conducted by Principal Retirement Advisors along with Nielsen for the December quarter, covered perception and concerns of Indian households about their own financial well-being.

"Indian households are maintaining a cautious outlook as they approach 2014. But it is encouraging to see that a majority of them feel that they are in control of their financial situation and are making decent progress towards achieving their financial goals. The Principal Financial Well Being Index will provide unparalleled insights into how Indian households are managing personal money matters," said Rajan Ghotgalkar, Country Head - India, Principal Financial Group.

Here are some of the major findings of the study…

Perceptions & Concerns of Economy in general

  • 48% of Indian Households expect the economy to worsen in 2014. This pessimist view is exhibited more by the older population. 
  • Fuel prices (79%), food prices (69%), rising inflation (74%) and unemployment (69%) are seen as top concern areas for the economy in the next 1 year
  • Overall 77% respondents feel that the prices of groceries, fuel and other household items will go up in next one year. Respondents feel that increase in prices for Food & Beverages (72%) and transportation (69%) are likely to affect the budgets seriously
  • 78% respondents are concerned about rise in home loan interest rates in the next one year
  • 57% of overall respondents see rupee falling more vis-a-vis US dollar in next one year

Household Spending, Savings & Investments

  • More and more respondents exhibit attitude towards high consumption & spending on new items & luxuries. Most Households expect spending to increase across all expense categories
  • Buying a House/property (51%) & Children expenses (education & marriage) are the key big ticket expenses expected in 2014
  • 74% Households are satisfied with their current levels of savings. 67% Households say that their savings have stayed the same in past 1-2 years
  • 69% Households are satisfied with their current level of investments

Holiday Plan: 73% people say they are not planning a holiday in 2014. Out of remaining 27% who are planning a holiday in 2014, 60% will spend the same amount as last year

Festivity spending: 64% people say they will spend the same amount as last year in the upcoming festivities

Planning for Unexpected Expenses/ emergencies: To cope with unexpected expenses, Indians plan to cut down expenses on non-essential items (42%) and use money from Savings (38%). This indicates that people will have no specific preparation to cope up with emergencies.

Financial Priorities & Attitude towards finances: Overall respondents feel that they are in control of their financial situation (63%) and are making good progress (63%) towards their financial goals.

Availing services of Financial Advisors

  • Experience (47%) and Qualification (47%) are key attributes that people look for in an advisor. Almost 70% people consult financial advisors referred by their friend / family & co-workers.
  • Setting Financial Goals (51%), Tax Saving / planning (47%) are the top reasons for consulting a financial advisor. Retirement planning also figures prominently with 35% respondents consulting financial advisor for the same.
  • Overall 64% respondents feel more financially confident after availing services of Financial Advisor
  • 55% people cite knowledge (know enough on their own) as the foremost reason for not consulting a financial advisor. 51% of those not consulting a financial advisor are willing to pay fees for financial advice in future

Retirement planning attitude & perceptions

Staying happy & stress free (48%) and having enough savings (45%) are the main thoughts for post-retirement finances

Overall 52% people claim to have started investing for retirement when they were 26 – 30 years old. 76% plan to retire between 56-60 years of age. Buying a house (25%), children education (23%) & children marriage are the Top 3 aspirations post retirement

Employee benefits & satisfaction levels

  • 75% respondents feel that employee benefits are critical for employee retention / better performance
  • Disability Insurance, Financial Planning, are the top benefits with highest satisfaction levels
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