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The Difficulty in Savings: An Indian Perspective


In a country as diverse and dynamic as India, the ability to save before spending is a crucial aspect of your financial stability in the long run. Despite India being a developing economy, many Indians find it challenging to save. This difficulty in savings can be attributed to various socio-economic factors, cultural practices, and financial behaviours. Understanding these challenges is the first step towards creating effective solutions that can help you to achieve your financial goals.

1. Instant Gratification

The culture of instant gratification is a significant barrier to saving in India. With the rise of consumerism, easy access to credit, and the influence of social media, many people prioritise immediate pleasures over long-term financial health. The widespread availability of online shopping, food delivery apps, and travel portals has made it easier than ever to spend money impulsively. Just don't forget to buy that iPhone from Amazon using easy EMI option with your credit card.

What you can do here is to wait patiently, think twice that do you really want that product and then go for a buy. Also, you can make a rule here stating, if you can't afford the product twice then don't buy it. Lets say, if your planning to buy an iPhone for 1 Lakh, do you have 2 lakh now to buy this product. If the answer is no, then better not to buy and wait for some more time or buy something cheaper.

Whenever your going out for shopping, keep a particular budget with you. Lets say, you are predetermined to spend only 2000 for this weekend shopping. Buy doing this, you will be staying below your means and there will be no impulse buying using your UPI. The best way to do this is to carry cash when you go shopping and tell to yourself that you will be spending only the cash which you have in hand.

2. Home and Auto Loans

Home and auto loans are another major impediment to savings. While these loans enable individuals to acquire essential assets, they also lead to substantial long-term financial commitments in the range of 20-30 years. The high-interest rates on these loans further exacerbate the situation, leaving individuals with little disposable income to save.

If your driving a car right now and thinking of buying a new one, you will have to ask a lot of questions to yourself before making that decision. Is the car runnings in a good condition, if there any major problem with the car, is the mileage too low, is the car very old, is it not suitable for long drives, etc. If you are not satisfied with these answers then you can think for the next financial step.

For the financial part, think about your annual pay which you receive. Lets say, you get a monthly salary of 50k which accumulates to 6 lakh in a year post taxes. Then probably your budget for the car should be a max of 6 lakh. This means with 10% interest, you will have a monthly EMI of 13k for the next 5 years.

You need to keep in mind your monthly fuel cost and maintenance costs attached with the car. Lets say your fuel costs 2000 per month, with a divided maintenance cost of 1000 per month. This accumulates to 16k per month. You can easily live with 16k going out from your 50k salary every month and sleep peacefully with more savings on your hand. But if you want a higher budget car, increase your income potential.

But the reality is people with 50k salary driving around in a 20 lakh car giving out an EMI of 30k per month.

3. High Cost of Living

The rising cost of living in urban areas significantly impacts the ability to save. Expenses related to housing, education, healthcare, and daily necessities consume a large portion of income, leaving little room for savings. In cities like Mumbai, Delhi, and Bangalore, the cost of living has escalated to such an extent that even those with relatively high incomes struggle to save.

The debate is always there and will continue to be there in future. Rent vs Buy. This is a long standing debate and both the sides have its own cons and pros. You will have to take a call on this and make sure your home loan EMI doesn't go beyond 30% of your monthly salary.

4. Lack of Financial Literacy

Financial literacy is crucial for effective money management, yet it remains low among many Indians. A lack of understanding of basic financial concepts, investment options, and the importance of savings leads to poor financial decisions. This ignorance often results in people living pay-check to pay-check, with no financial buffer for emergencies.

In this era, we have numerous asset classes to invest, save money and do more. But not everyone is aware of this. If you are starting to save a part of your monthly income, its better to explore options in equity, debt, FD, and gold. Make sure, you put your saving first as and when you receive your salary and then spend the rest. Save first and spend later.

5. Social Obligations and Cultural Practices

In India, social obligations and cultural practices play a significant role in financial behaviour. Events such as weddings, festivals, and religious ceremonies require substantial expenditure, often leading to debt. The societal pressure to maintain a certain standard of living and to participate in communal activities can strain personal finances.

The thing is to live on your terms and not to live on others terms. You are not living to show to others how much money you have. There is a big difference between being rich and being wealthy. You can look into youtube videos to understand the difference. Once you understand this, then you need no more obligations.

We will have to form a cultural practice to start saving at a very young age. We will have to educate our children about the advantages or saving/investing and its effects in their lives in the long term.

6. Inflation eating up our savings

Persistent inflation erodes the value of money, making it challenging to save. When the cost of goods and services continually rises, people need to spend more to maintain their standard of living, leaving less money available for savings. Inflation also diminishes the real returns on traditional saving instruments like fixed deposits and savings accounts.

You need to keep this in mind. Inflation on an average is 7%. Whatever asset class you put your money into will have to beat this or at least par with this, then only ideally your money will grow-Compounding. Index funds have been historically beating inflation in India in the long term.

7. Lack of Discipline

Financial discipline is essential for saving, yet many individuals lack this trait. The tendency to spend rather than save, driven by poor budgeting and planning, results in inadequate savings. Without a disciplined approach to managing finances, it becomes difficult to set aside money regularly.

As I told, save first and spend later. If you have the discipline to put aside a portion of your income into savings or investing over a longer term, then with enough discipline, you will feel the power of compounding on your savings.


Saving money is a fundamental aspect of financial well-being, yet many Indians face significant challenges in achieving this goal. From instant gratification and high living costs to cultural practices and financial illiteracy, the obstacles are numerous.

However, with targeted efforts to enhance financial literacy, promote a savings culture, introduce innovative saving instruments, and implement supportive government policies, these challenges can be overcome.

By fostering a disciplined approach to money management and leveraging technology, individuals can build a more secure financial future. Ultimately, saving is not just about setting aside money; it's about creating a mindset that values financial stability and long-term security.



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