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.
Savings in Nepal: Some interesting figures from Global Findex database 2017
- 46% adult population (Male 41%, Female 51%) saved any money in the past year; compared to 45% in 2014
- 17% of the population saved at a financial institution (Male 16%, Female 18%); compared to 16% in 2014
- 24% saved using a savings club or a person outside the family (Male 17%, Female 29%); compared to just 17% in 2014
- 17% of the adult population in Nepal saved to start, operate or expand businesses or farms; compared to just 12% in 2014
- 12% of the adult population in Nepal saved for old age (Male 10%, Female 15%); compared to 9% in 2014
The above-mentioned figures show that saving habit has increased among adults in Nepal.
What all Nepalis need to adopt saving habit – a bank account
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.
Don’t have a bank account yet? Open a bank account and start the saving habit and prepare for the future. Money saved today will help you in emergencies tomorrow. Savings can also be transformed into much-needed investments in the future.
Infographics partner: Nepal in Data