BankBazaar's Aspirations Index 2023: How rising inflation is redefining financial ambitions

A BankBazaar study unveils the sobering reality of inflation's impact on aspirations as fewer opt for home and education loans, while medical emergencies surge. Rising living costs and work pressures top the list of hurdles.

BankBazaar Study reveals how individuals respond to economic pressures

Inflation has been a looming concern for many, and its effects are palpable. The BankBazaar report highlights how this economic hurdle has influenced the borrowing habits and aspirations of individuals across the country. The study examined 1,732 professionals aged 22–45, focusing on 17 goals grouped into Health, Relationships, Wealth, Fame, and Personal Growth. The index was based on responses regarding goal importance, confidence in achievement, and preparedness (financial or otherwise) for 17 goals.

Highlights:

  • Inflation has reshaped borrowing habits, with fewer loans for housing and education and more for emergencies.

  • Repo rate hikes of 250 basis points caused substantial EMI increases.

  • The Aspirations Index declined slightly due to economic strain, from 87.3 in 2022 to 85.3 in 2023.

What are people seeking loans for?

In 2023, while fewer individuals (47% compared to 49% in 2022) sought loans for housing and education, there was a surge (32% compared to 29% in 2022) in borrowing to meet unforeseen medical expenses and emergencies.

How have interest rates impacted people’s EMIs?

The repo rate hike, with a substantial 250-basis-point increment since May 2022, has led to significant spikes in Equated Monthly Instalments (EMIs) for borrowers. Nearly half of those surveyed experienced an EMI increase ranging from Rs 2,000 to Rs 10,000 over the past year.

Also ReadRBI Holds Repo Rate At 6.5%: What You Should Know About The Impact On Borrowers, Markets, And Inflation Outlook

How have interest rates impacted people's aspirations?

The BankBazaar Aspirations Index (BAI) witnessed a dip from 87.3 in 2022 to 85.3 in 2023, the first time since COVID-19, reflecting the strain of higher living costs and borrowing expenses. However, there's a glimmer of hope: the study suggests that rather than abandoning their dreams, 32% of people have chosen to postpone them by 6–12 months and 15% by another year. While 18% of subjects chose not to impact their aspirations, 11% reduced them, and 15% decided not to pursue them.

What are the top aspirations for 2023?

Health emerged as the top priority, scoring 89.1 out of 100. Relationships and wealth follow as the top aspirations for individuals, scoring 88.9 and 88.2, respectively. Mental health and happiness have emerged as the primary goals for the second consecutive year. Preparing for mental health has the highest aspiration-readiness gap of 5.5.

What are the primary hurdles to achieving aspirations?

The study identifies two significant hurdles: the exorbitant cost of living and relentless work pressures. For women, family responsibilities add an extra layer of challenge. Interestingly, early retirement, while still a significant goal for many, has slipped in priority from sixth to ninth in 2023. However, the percentage of those with a retirement corpus of Rs 2 crore or more has increased from 14% in 2022 to 20% in 2023.

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 Disclaimer: This article is intended for general information purposes only and should not be construed as insurance or investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.

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