The emerging affluent – mind the savings gap

They save actively, and have growing incomes, but could be missing out on reaching their goals

Meet Joyce. In her early thirties, she lives in Singapore with her husband and baby. Joyce earns about USD50,000 as a sportswear consultant, and she loves sports as much as she loves a good deal. Yet, she says that she’s not very confident about managing her family’s financial future.

Joyce is one of 8,000 people we spoke to for The Race to Save, our new report on the savings ambitions of the emerging affluent in Asia and Africa. We define emerging affluent as individuals who are earning enough to start saving and investing.

This is a diverse group, ranging from single millennials, just getting started in life, to young families like Joyce’s, corporate professionals and small business owners. They’re ambitious, well-educated and increasingly digitally savvy – and their incomes are growing.

Meeting savings goals

The emerging affluent are active savers (two in three put money aside every month) and they have big dreams – owning their own home and a good education for their children are top of the list, according to our report.

Yet, what also stands out is this: the emerging affluent aren’t getting nearly as much out of their savings as they could, and some are still leaving money under the mattress.

Simple changes, such as switching to a low-risk wealth management investment approach, could make a big difference – an average of 42 per cent over a 10-year period for six of the countries surveyed. With this still-conservative approach, the gain would be more than 50 per cent in Singapore and a whopping 86 per cent in Hong Kong.

Confidence among savers in some of the world’s fastest-growing markets is now noticeably lower than it was a year ago, our research shows. While 83 per cent said in 2015 that they were confident about saving enough money to fund a property purchase or other savings goals, only 72 felt confident at the end of last year.

Behind the numbers sit real human hopes of family stability, access to education, a comfortable retirement and entrepreneurial success. There are broader implications as well: with rapidly growing disposable incomes, the emerging affluent are important contributors to growth in some of the world’s most dynamic markets.

Digital solutions

Technology may have an important role to play in helping the emerging affluent to reach their savings goals. Our research highlights that when individuals use digital tools and services on a regular basis, they put aside on average 8 per cent more money than infrequent users. If banks can make digital solutions like online transactions, live chat and video banking more available to more people, it could make saving just that little bit easier for Joyce and others like her.

Read our full report here and use our interactive tool to benchmark yourself against our findings.