Americans are becoming more satisfied with their financial lives in 2019. The recently released quarterly Personal Finance Satisfaction Index showed an improvement of 27 percent in the last year, according to the American Institute of CPA. Yet, India continues to rank low on the happiness charts when it comes to finances despite booming economic activity in technology, fintech, and other sectors. Experts and past studies alike have repeatedly made the link between happiness and money, with results indicating that the lower a person’s annual income falls below $75,000 the unhappier that person is. While we know that there definitely is a correlation between the two, the question now is: What is driving the recent boost in financial satisfaction and how is it different for the Indian population?

Employment And Income On The Rise In The US Which Has Meant More Income In Households

In the past few years, the median household income has increased consistently. In 2017, the figure was $61,372 and in June 2018, it rose to $62,175. India is set to follow suit soon; it was announced in late 2018 that the country will see a 10 percent salary increase in 2019. Unemployment has also declined to 3.8 percent, meaning more Americans are able to secure salaries while more part-time workers have been able to transfer their hours to full time which has meant a bump in household income. Now, there are 1 million more jobs than unemployed workers and the rise in consumers’ earning power is showing. There is a contrasting story for Indians. The unemployment rate rose to 7.2 percent, which means even with the increased pay, fewer workers are experiencing the benefits.

A Ripple Effect Of More Income: People Are Meeting Their Debt Repayments

In the last quarter of 2018, the delinquency rate on U.S. home mortgage repayments was 4.06 percent, the lowest in 18 years. So while numbers are showing more people having credit cards and consumer debt, they are sticking to their repayment plans and more importantly, able to meet those repayments on time. For the first time in decades, household debt levels are now closer relative to Americans’ disposable incomes thanks to increased wages and more people finding employment to support their families. With more income coming into households, consumers are able to keep up with their home loans. Although the percentage of mortgages moved to foreclosure increased 2 percent, the rise is attributed to a slower foreclosure process in some states and those loans which were severely overdue for an extended period.

Average revolving debt such as credit cards has also declined in recent years. According to the Federal Reserve Survey Of Consumer Finances, Americans now own an average of 2  credit cards and over 59 percent of them have at least one. That is a 3 percent increase from 2017 and highlights growing confidence among consumers in their credit options and the increase in lending institutions offering expedited personal credit acceptance globally, particularly across the U.S. and Asia. Meanwhile, in India, lending is also on the rise, with credit growth doubling and credit card usage has blossomed by 25 percent.

Savings And A Secure Financial Future Are Becoming A Priority To Americans

Americans are making saving a priority, especially for their life after retiring. Approximately 28 percent of Americans are putting away more for their retirement years than they were last year and as a result, feeling happier about their future prospects. There still remains a large number of people that are worried about outliving their retirement savings but the fact that consumers are taking matters into their own hands and ramping up their savings has boosted their outlook.

On the other hand and across the ocean, Indian workers are not planning for life post-retirement. In fact, an HSBC report has shown that only 1 in 3 workers are saving money in a retirement fund. Besides the income factor, this difference in approach may have to do with the varying outlooks and expectations of life after leaving the workforce. In India, 68 percent of workers are expecting help from their children in their retirement. However, past patterns have shown that this is not necessarily the case since only about 30 percent of people do actually receive financial support. Ignoring the gap is leaving Indian workers woefully unprepared for their senior years, a core part of the population.

While there are some similarities in the financial behavior between the two countries, key factors remain in contrast. The approach to savings and a financial future stands out as a prominent one and while the use of credit is increasing in both, unemployment and the ability to repay those debts is weighing heavily on households in India. However, the optimism about the future is shared and while as much as the point of views differ, that point remains constant.