How Indian and American Savings Differ

By | June 7, 2015

Small Savings

Columbus might have confused America for India, but we had more in common with the then Red Indians than we have now with today’s Americans. We’re not referring to the whooping and dancing of course (that’s racist!).

Jignesh, a software engineer, moved to the US and found it very tough to adjust to the vast differences in our cultures. Gradually, he realized that we are just as different when it comes to saving and spending.

Maslow’s hierarchy would be thoroughly confused if it met an average Indian. Giving up food and good shelter to save for a wedding in the far away future. Huh?!

But that’s what we Indians diligently do.



America is a consumerist society, giving high impetus to an epicurean way of life. Shopping events like Black Friday and Cyber Monday display America’s spending culture.

We, on the other hand, believe in frugality (although times are a-changing). This behavioral trait of ours dates back to the colonial times. It left a mark on our older generations. Hence, they always preferred to spend only on things that were necessary. This led to savings becoming a norm. Every kid, even today, begins with their prized Gulla (piggy bank).


A debt is a huge no-no to many Indians even today. Some conventionalists still look down upon bank loans. If you do not have the money, you simply don’t buy. We don’t mind selling our property for our children’s higher education and live on rent till we accumulate funds to buy one again.

The US, on the other hand has an evolved and structured financial service sector. Loans were, and are, available at lower rates compared to India. And loan re-financing is fairly well practiced.


While the idea of a ‘nuclear family’ has now slowly seeped into the Indian society, Indians still have more close-knit families today than in the US. Just like Jignesh’s low attendance in college and his Big Fat Indian Wedding were funded by his parents.

Children continue to share their homes with their parents even after they’re working. This has an added benefit of saving on rent or purchasing a home. Managing finances, wealth and planning on savings thus becomes an important family affair. There is more stress on savings and frugality than checking out various investment options.

In the US, it is the exact opposite. Kids move out at 16 or latest at 18 and mostly manage on their own since. Sometimes, Las Vegas drive-in weddings work out very well. (Or do they?)

Compulsory savings

US citizens who start working with companies that provide 401k have an option to contribute to it.

But the Indian government fund, the PF (Provident Fund) isn’t optional and is a compulsory saving for Indians.Similarly, there are certain compulsory savings that Indians make to save on tax. The Big Brother looks out for all of us.

Indians have imbibed savings in their DNA, having been drilled into them from when they were tiny tots.

Retirement planning

Indians are family oriented. We invest a lot of money in our children – education, marriage, settling down, starting a business and whatever else they might need. By the time retirement rolls around, most of the savings have been used up.The parents then look towards their children to take care of them in their twilight years.

We all know the Bollywood dialogues about giving back to the parents who’ve put their sweat, blood, tears and money into rearing you.

Whereas, Americans are more individualistic. The parents in the US help out their children only up to a point after which they don’t support them monetarily anymore. The parents might be able to save up well for retirement but have nobody to fall back on.

Saving on services – quality & expense

Indians tend to save a lot on various outsourced services as well. With a huge workforce at India’s disposal, most of the outsourced services like cleaning, washing, plumbing, wiring, maintenance, etc. become cheaper than the US. There, of course, is a marginal difference in the level or the quality of services. But the amount of money spent on these, as compared to Americans, is very less.

We all have a myriad of ‘bhaiyas’ – Dhobi bhaiya, doodhvaale bhaiya, mithaivaale bhaiya. And then there’s always Kanta Bai to take care of everything else.

Indians today may enjoy the occasional Starbucks and count the days until Burger King arrives, but we still have a lot in common with our not so old dhoti clad ancestor. We love to haggle and count each every paisa. Hai na?










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