Khalti Blog, 4 July 2018
The economy of Nepal is consumption oriented. Nepal Rastra Bank’s Fifth Household Budget Survey 2014-15 shows that Nepalis spend over 85% of income on consumption. Meanwhile, the World Bank’s Global Findex database 2017 shows that only 46% of the adult population in Nepal managed to save money in the past year. These figures signal a poor habit of savings in Nepal.
Nepal’s per capita income is estimated to have crossed 1,000 U.S. dollar mark, as per Central Bureau of Statistics. Salary, wages, allowance and pension, income from business and remittance income are the major sources of household income. However, we spend most of our income on food and beverage, housing and utilities, education, clothing and footwear, transport, communication, and similar other purposes.
The above-mentioned figures show that saving habit has increased among adults in Nepal.
Currently, only 45% of the adult population in Nepal has a bank account. Even those earning population don’t put their money in banks. As wages are paid in cash, they put it in their pocket and spend it instantly.
Studies conducted in India have found that ‘making transfers to bank accounts instead of paying cash can enhance savings’. When paid on the account, the money is saved by default, while – as long as payments are done in cash – the money is ready to be spent.
While many people spend most of their time and energy on earning more, it is important to note that without learning the art of spending money well along with judicious saving and prudent investing, they may not be able to create a promising future for themselves and their families.
The government in its latest budget has announced to open a special campaign to open a bank account of all Nepalis within a year. It is expected to bring financial inclusion to the unbanked population. Furthermore, to promote banking habit, the government has already started distributing social security allowance and all other government to citizen payments through banks. On top of this, if financial literacy is also provided, saving habit among Nepalis will get a huge boost.
Infographics partner: Nepal in Data