Indians have better financial management skills! Is it so?


An extensive recent survey of 10 countries – Consumer Resourcefulness Study – by ING Group has showed that Indians have a very sound financial literacy level of 55% which was only second to Japan. Most of the Indians seem to have managed their entire household budgets in a better manner as compared to their counterparts in countries like USA, Mexico, Netherlands, Romania, Belgium etc.

Financial Literacy!

So what was the aim of the survey?

The main aim was to find out the way the financial literacy of a person affects his attitudes and behaviour on buying or financial products or simply making financial decisions.

What was the sample size and the countries in which the research was done?

The survey was conducted across a sample of around 5000 respondents across 10 major nations namely India, the USA, Mexico, The Netherlands, Romania, Poland, Belgium, Spain, Korea and Japan.

A Financial Quotient tool was set up to understand the financial literacy of the respondents.

Interesting Results

Though there were different results for different countries, the results for India are very significant to us. First among them was the fact that financial literacy in our country is in the top 2 of the 10 countries surveyed. This goes with the fact that we Indians always have a habit of making sure that our bank balances are safe in whatever situation we are in. Be it insurances, loans, investing in shares and stock markets, Indians are always ready to learn more to be safe.

The Indian tendency of planning well for the future whether it is children’s education loans or pension schemes is shown by the fact that among the 10 we are the best in making sure that our retirement benefits are present. With more and more senior citizens being thrown out of their houses by their children, retirement benefits has become that much more important. Indians are also the largest buyers of insurance products (87%) as compared to 54% globally.

The Indian tendency of saving money for the problematic times is also proven by the fact that on a question “What would do with US$ 100 in the end of the month”, Indians say that they would put it into the savings account. They are among the top most in the world to have an emergency fund (87%), proof of the fact that they seem to be always read to face any eventuality. That’s why it’s said that we are always prepared for all the stages of our lives.

On the other hand, the Americans have turned out to be the exact opposite. With not much importance being given to retirement benefits and having an emergency fund, their notoriety of being conspicuous consumers has again come to the fore.

Now we know, why the recession affected India way lesser than the other countries around the world, isn’t it?

  1. Brijendra Dharampuria says

    It is good news for Indian that they have sound financial management skills compare to its counterpart countries. Therefore when the economy of many countries have been go down then Indian has very little effect. I think financial management skills of Indian made India to stand in that critical situation. Hope, Indian will make their strong presence in top list in many other survey.

  2. Altaf Rahman says

    Nice article Aseem,

    @ Avik Kedia, though your point of view is justified, I would like to explain (not contradict)
    What Aseem is trying to highlight is the cultural habits of two seperate worlds West and East.
    If you compare the middle class of West to Middle class of India the points mentioned above is true. If you compare Low income class of West to that of India also the article is true.
    What you are doing is comparing habits of Middle class and low income groups of India. If you see the view of the author you will agree.
    I had the chance of working along with western employees and Eastern people (Indians, Philippinos, Bangladeshis, Srilankans, Pakistanis, Egyptians, Thais, Vietnamese and many more). Both Western, Easterners are in both Middle class and low class ones. The general cultural habits of Westerners (both Middle class and low income) are similar when we are talking of spending habits where as the spending habits of Indians are similar.
    Almost all Western people are covered under retirement schemes by their govts. Each month they have to pay to their govts certain amount towards their retirement schemes. All the Westerners are worried about are about paying that. (Call it tax or deduction or what ever). Once that obligation is fulfilled they are happy go lucky guys. Let me be more specific. They do not bother about saving for their children. Most of the time they spend their time in pubs after office hours which is from my point unnessessary spending. When I ask them in a positive way they tell me that their kids are off the blocks (the kids are majors and studying and at the same time earning so no need to save for them)

    The cultural difference is once you are out of school, you earn for yourself. Your parents responsibility is over. Now the kids dont take responsibility to look after their parents. The parents have to save enough to look after themselves. So the parents who were working with me say they are worried about saving for their retirement. Once they fulfill that requirement, the remaining money for them is to spend on themselves which they do by going to pubs (which is nothing but drink bear, socialize, spend the evening playing billiards, discussing events) The habits are same for people earning between 5,000 dollars for technicians to 20,000 dollars for managers per month.

    Unfortunately estern govts dont have such schemes. We know that even after our kids go out of schools, we try our best to accumulate assets for our kids. We work hard, spend enough for surviving, send the balance amount to India to be invested in assets like properties, gold, or furniture or bank balences kids higher education etc. Once we die, our kids incorporate those assets. The habits are the same for a laborer earning between 75 dollars to a manager earning 10,000 dollars per month.

    I am not trying to contradict Avik but those are my two paisa :)

    1. Aseem Rastogi says

      Thanks Altaf. You have rightfully put forward the point I was trying to make here :)

  3. pushpendra paliwal says

    What would do with US$ 100 in the end of the month ?
    May i get a honest expert opinion on this.

  4. Avik Kedia says

    I have serious reservations about the “Indian Target Population” covered in this study. This must have covered some middle class people, who by the way, do not represent entire India. Middle class people would represent approx. 20% of the country, while 80% would be represented by the low-income classes, whom this study did not cover. This 80% does NOT have Emergency Funds, Insurance, Investments, Financial Planning or any of the things that the middle classes or affluent take for granted. so, to make a statement that India is 2nd most financially literate is really misleading. 80% of the people don’t have bank accounts; than what is the sense in talking about being Financially Literate Consumers?

    1. Aseem Rastogi says

      Actually Altaf has explained the point I was trying to drive home. We Indians may not be really financially literate in the real sense of the word. But when it comes to having emergency funds, insurance, investments, planning for retirement we are definitely much better off even today than our western counterparts!

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