Are Young Indians Not Saving Up For Their Kids? Millennials Bat For FIRE Goals Instead, Say Kids Are Not Their ‘Retirement Plan’

Financial independence: Young Indian millennials debate traditional saving norms, prioritising personal FIRE goals over generational wealth, reflecting a shift in cultural and financial priorities.

An AI-generated image illustrates the generational contrast in financial habits in urban India.

Source : ChatGPT

Earn well, spend mindfully, and save cleverly. That’s the mantra many generations of people in India have followed to live conveniently and die peacefully, thinking they have saved enough for their children to survive after they are gone. Have things started to change? Are young Indians not saving enough for their children any more? Are they more into self-indulgence?

A discussion on Reddit threw some light on the subject, with millennials pouring their heart out on what they think about spending, investing, and saving — for themselves, for their parents, and for their children.      

The user who started the thread wrote how it is being seen that high-earning young professionals “either spend a crazy amount of their money on themselves (clothes, restaurants, trips etc) or they invest money for their own FIRE goals”. This, he said, was in stark contrast with their parents’ generation who would save every penny they could to secure their children’s future.  

The user, who identified himself as a 31-year-old male, wrote: “From a psychological point of view, I just don't get it. We are still a third-world country. Why wouldn't you want to set your kids up for a bright future? Do most Indians think that the economy in 10-15-20 years will be strong enough to ensure a great paycheck, such that any inheritance will be dwarfed by what their kids end up earning?”

Are young Indians not saving for their kids?
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The post opened up an interesting thread of discussion. While a few agreed with him, many said they preferred to invest for their own “FIRE goals” rather than depend on their kids or beg from them for survival at the fag end of their life — which has been the case with many parents as many Indians usually think investing everything in the children is the right thing to do because the latter would take care of them in their old age. 

'I Am My Parents' Retirement Plan...'

FIRE is the short form for 'financial independence and retire early', which is described as a movement that believes in little spending and higher saving — with the goal of accumulating enough money so you can plan an early retirement and live on your terms.

Explaining why that’s not a bad approach, one user wrote that while their parents’ generation provided for three generations — they took care of their own ageing parents, managed their own sustenance, and saved up to secure their children’s future — doing the same now is not feasible any more.  

“In a growing economy like India most middle class parents would not be able to pass on considerable inheritance which will surpass wealth gained by their own children in their lifetime. This is true for any economy transitioning to middle income status.”

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Batting for FIRE goals, another user wrote: “I am my parents retirement plan. I don't want to do the same to my kid.”

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Here is a look at other comments on the thread.

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Young Indians Prefer To Live In The Moment: Survey 

A recent survey found that young Indians like to live in the moment, and prefer to take financial dicisions that get them immediate gratifiction. According to the Mintel India report released in November 2023, younger people, men in particular, have a "greater inclination toward indulgence, with 68% of Gen Z urban males spending money each month on clothing and accessories, compared to 54% of Gen Zs overall".

“Consumers are seeking relief from ongoing stress amid rising prices due to global inflation," said Saptarshi Banerjee, Senior Lifestyle Analyst, Mintel Reports India. "They are looking for affordable indulgences that can bring comfort and solace without being too hard on their wallets."

In contrast, however, it has also been found that more young people are now buying houses, bringing down the average age of a home buyer. 

"The average age of a homebuyer has gone down from 45 to 36 today in India, and two-third of India's population is below the age of 35," Vipul Roongta, the MD and CEO of HDFC Capital, told ABPLIVE in a recent interview. He said while this means two-third of India's population is yet to buy a home, it also means that "with GDP per capita going up, so many people will not only be eligible from a demographic perspective to buy it, but they will also be able to buy it because the GDP per capita is going up and they will be able to afford it”.

Roongta said the market potential is high, and India might see this average age of home buyers going down further "from 36 to probably late 20s, because everybody will look at real estate not only for investment but also for its emotional securities".