BankBazaar, India's premier provider of free credit scores and an online marketplace for financial products has unveiled the sixth edition of its renowned study—the BankBazaar Aspiration Index. The most recent findings indicate a decline in the Aspiration Index for the year 2023, which now stands at 85.3. This decline can be attributed to the increasing expenses associated with living and borrowing.
Focus on mental well-being
The decline in this year's Index is occurring in the context of a global economic slowdown, resulting in increased living and borrowing expenses. Despite these challenges, mental health remains a top-ranked and highly sought-after goal, with an Aspiration Index of 89.1. Other health-related goals, such as maintaining a healthy diet and adhering to a regular physical fitness regimen, are closely ranked in the 86 range. Children's education maintains its position as the second-highest priority, with a score of 88.9, followed by home ownership at the third spot, with an index of 88.2.
The most favoured goals among Indians include prioritizing mental health and happiness (52 per cent), travelling the world (48 per cent), saving for their children's education (38 per cent), aspiring to be self-employed (32 per cent), and indulging in life's luxuries (30 per cent). However, there is a concerning trend as retirement planning (84.1) appears to have diminished in importance this year. While early retirement remains among the top five goals for 28 per cent of individuals, it has slipped from the sixth position last year to ninth this year. Additionally, the percentage of people with a retirement fund has declined from 60 per cent last year to 56 per cent this year.
Adhil Shetty, CEO, BankBazaar said, “The global economy is gripped by wintry conditions. High inflation and soaring costs of capital have been a persistent pain since last year. Mental health remains a major concern as stressors mount. In the larger scheme of things, India remains a bright spot in the global economy. This is our decade. We will overcome short-term challenges. But for now, the story we have is of a few demographics struggling more than the others. After the winter comes spring and there’s much to look forward to in 2024.”
Inflation remains a stifling force on aspirations
Rising inflation and surging capital costs continue to hinder aspirations. The most significant obstacle is the high cost of living, cited by 48 per cent of respondents, followed closely by limited savings at 44 per cent, and a tax system that doesn't account for inflation, noted by 30 per cent.
With the substantial increase in the cost of borrowing, individuals are adopting a more conservative fiscal approach this year. A significant 82 per cent of respondents have felt the impact of high borrowing costs on their aspirations. The proportion of people taking out loans for asset-building purposes such as housing, vehicles, education, and home improvements has declined by 2-3 percentage points.
Despite these challenges, optimism remains prevalent, with the majority (56 per cent) choosing to delay their aspirations rather than downsizing them or abandoning them entirely.
Women lead the aspiration movement
Historically, women have exhibited higher levels of aspiration compared to men, with older women in their 30s and 40s emerging as the most aspirational group. They are motivated by a strong desire to excel both professionally and socially. Interestingly, they tend to seek external sources of support rather than relying solely on themselves.
Furthermore, these women are more inclined to borrow strategically, handling credit cautiously and utilizing it judiciously to enhance their quality of life. They are substantial investors in areas such as their homes, education, and leisure activities, including holidays.
According to Shetty, the presence of women in the study, especially among the older demographic, consistently influences the national sentiment positively. This drive among women to actively contribute and excel in various spheres has significant implications for India's overall growth. It is anticipated that women's workforce participation will increase, becoming a potent driving force in India's journey towards becoming a $5 trillion economy.