‘Pakistanis prefer to save cash at home’

As many as 50 per cent of the “emerging affluent” Pakistanis prefer to save cash at home as opposed to only 15pc Indians belonging to the same segment of society.

According to a study carried out in eight countries by Standard Chartered Bank (SCB) along with independent research agency GlobeScan, the preference for keeping cash at home stems from the desire to be able to access savings at short notice, wanting to avoid risk, or lacking investing experience.

The study looks into the savings habits of 8,000 emerging affluent consumers aged 25-55 across China, Hong Kong, India, Kenya, Korea, Taiwan, Singapore and Pakistan.

Speaking at its launch on Monday, SCB Head of Segments Arslan Khan said Pakistan-specific findings of the report are a result of face-to-face interviews with 1,000 Pakistanis conducted in November and December last year.

Each of these emerging affluent Pakistanis was a graduate, earned a gross monthly income of between Rs40,000 and Rs500,000, and belonged to A and B socio-economic groups, a classification based on their spending habits and living standards.

In addition to keeping cash under the mattress, favoured savings methods adopted by emerging affluent Pakistanis include savings accounts (38pc), property investment (8pc), mutual funds (4pc) and time deposits (3pc).

In contrast, their Indian counterparts seem more sophisticated given their preference for mutual funds (24pc), fixed income securities (19pc) and stocks (17pc).

An emerging affluent Pakistani saves only 14pc of his or her monthly income, lowest among the eight countries where the overall monthly savings average is 27pc, according to SCB Head of Wealth Management Muslim Reza Mooman.

Reasons for low savings among emerging affluent Pakistanis include not having enough money to save, difficulty in setting financial goals, preference for spending in the immediate term and low interest rate environment.

The study said relying on a basic approach to saving money can add years to the amount of time it takes the emerging affluent to achieve their savings goals.

“Saving for life-after-work only comes out on top for the 45-55-year olds – except in India, Kenya and Pakistan where children’s education is the priority for almost all age groups,” it said.

Switching from a basic savings approach to a low-risk wealth management strategy can increase the return by an average of 42pc over a 10-year period for Asia’s emerging affluent.

Emerging affluent Pakistanis, by moving one step up from their preference for basic savings techniques, can earn 82pc more over 10 years, the study said.