Managing personal finance isn’t just about crunching numbers and paying bills on time; it’s the secret sauce for family success and happiness. From cosy homes to dreams like buying your own boat or giving your kids the best education, smart money moves set the stage for a bright future. Yet despite meticulous budgeting, unexpected expenses might hijack one’s financial plans, underscoring the timeless adage – financial planning is telling your money where to go instead of wondering where it went.  

Our experts at RedCore, conducted an in-depth analysis, uncovering insights into the personal finance behaviours of middle-income, emerging-middle and low-income groups. Let’s delve into their financial habits and see how we can bridge the financial gap and explore hidden personal finance needs for middle and lower-income groups, thereby offering a better lifestyle within their incomes.  

Effective financial inclusion drives economic growth, and in today’s world, fintech players are striving to achieve financial inclusivity for our nation. 

During a survey conducted on income trends, around 77% of low-income respondents said their income hadn’t increased in the last five years. Even those who saw some change reported only a negligible increase. A major reason for this is inflation, which eats away at any real income gains, preventing noticeable improvements in their lifestyle. As prices for necessities like food, housing, healthcare, and transportation rise, any slight income increase gets quickly absorbed

Growth in Income across Households | Redseer

Furthermore, low-income groups often work in unregulated sectors where their incomes are inconsistent. This instability makes it difficult for them to perceive any consistent improvement in their financial situation, even if they occasionally earn more. Limited access to formal banking and financial services means that many low-income individuals are unable to save efficiently or invest in ways that could improve their financial health. 

Spending Behaviour and Savings Patterns

Spending Behaviour | Redseer

RedCore’s findings reveal interesting insights into how different income groups manage their monthly expenses and savings. The study shows that middle-income groups manage to save about 20% of their income, emerging-middle groups save 17%, and low-income groups save 14%. These figures are significantly lower than the savings of the average Indian household, which is approximately 30% of their monthly income. Most of these spending is towards essential needs like food, medical expenses, housing costs (including rent and utilities), lifestyle expenses (like clothing and loan EMIs), and educational costs for their children’s schooling. However, around 8% of households have reported having zero savings in recent months, which shows that some groups are financially vulnerable. 

Indians have a risk-averse attitude, with more than 75% of low and middle-income households saving or investing in banks and preferring traditional methods. Households tend to favour bank savings, fixed deposits, and post office savings schemes such as NSC, Kisan Vikas Patra, Sukanya Samriddhi, and recurring deposits. 

In contrast, people are less inclined towards riskier investments like stocks and mutual funds. This trend highlights a conservative approach to financial management, with a clear preference for low-risk, stable returns. It underscores the need for better financial literacy and access to a broader range of investment products.  

Investment options in past | Redseer

But who’s stealing the real show? The online fashion sector, which is poised to steal the spotlight with its meteoric rise. With experts forecasting a staggering USD 36 billion surge in GMV by 2030, fuelled by an impressive CAGR of 20% from 2023 to 2030, the stage is set for unprecedented opportunities in the e-commerce sector. As more folks hop onto the online shopping bandwagon, the future of fashion e-commerce is brighter than ever.  

Managing Income-Expenditure Deficits 

The survey investigates how households navigate situations where expenses surpass their income. Notably, 1 in every 4 individuals, which is equivalent to 24% of households, reported having zero savings yet opt for formal lending options such as micro-credits, bank loans, and credit cards. This highlights that there is increasing adoption of these formal lending options among middle/emerging or middle/low-income households indicating significant opportunities for growth in this sector. Conversely, around 65% of households rely on assistance from friends and family when they face financial issues, showcasing a significant dependency on informal lending sources.  

Causes for savings dilution in households 

The following causes highlight the reasons for household savings dilution: 

  • Medical Emergencies: Medical expenses account for 30% of savings depletion. This highlights the lack of adequate health insurance coverage and the high cost of medical care, forcing families to use their savings for unexpected health-related expenses. 
Savings Dilution | Redseer
  • Children’s Education: Representing 22% of savings dilution cases, education expenses indicate the significant investment families make in their children’s future, often at the cost of their financial security. 
  • Marriage Costs, Job Losses, and Debt Repayments: These life events are also major factors contributing to the depletion of savings. Families face financial strain due to the costs associated with weddings, sudden job losses, or the burden of debt repayments. 

Imagine having access to affordable health insurance, educational loans with favourable terms, and solid financial planning services—these could really ease some of the financial stress for families. Fintech companies and policymakers can play a big role in making middle and low-income households more financially stable and secure by promoting financial literacy and offering emergency financial solutions. Creating a personal finance plan is essential for managing money effectively and ensuring long-term financial stability. It provides structure, encourages disciplined saving and spending, and prepares you for both expected and unexpected financial challenges. For households across all income levels, establishing and adhering to a personal finance plan is a fundamental step toward achieving financial stability and long-term prosperity. 

Fintech companies and investors have a unique opportunity to address these challenges and create solutions that can significantly impact the financial well-being of millions. They can tap into a vast market and contribute to the broader goal of financial inclusion with tailored financial management plans for middle and low-income households. 

Interested in exploring or capitalizing on these trends? Want to know more about how fintech players can tap into the market and help more individuals plan their finances better? Reach out to our market expert Jasbir S Juneja and subscribe to our newsletter now. Hurry! 


  • Jasbir is a Chemical Engineer with a bachelor's in technology from the Indian Institute of Technology. Jasbir has worked with numerous high-profile clients in every industry to develop result-delivering strategies at Redseer Strategy Consultants.