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Personal Finance by the masses

A youth in his late 20s, a banking professional, was not glad when asked about his investment. He disclosed that he invested certain amount in one asset management company with the aim that his money would compound. As per his statement, he paid certain amount around five months ago to a representative of an asset management company and has been getting regular update about his investment. He does not seem glad since he thinks that certain amount was charged as a fee for the service since his money would be invested in the stock market with the prudent decision of a mutual funds expert. He expressed his displeasure that as of today, his amount is less than what he invested five months ago. He does not agree with the reality that stock market is not performing as well as it did in 2016. He intends to backtrack on his decision of investing through an asset management company where a specialist manages the funds with his/her expertise. Well, this may be an exceptional instance of an individual and his approach for personal finance.

One seems befuddled when intending to invest for retirement planning, weddings and higher education of kids, purchasing a house etc. It is mandatory to have financial independence after retirement for multifarious reasons. This calls for prudent retirement planning. However there is no culture in Pakistan for saving for the days after retirement. The concept of annuity is not pervasive in our country. The planning for the wedding of kids is a monumental task. It is a whopping one-time expense since there are multiple expenses such as Wedding Ceremony Rental, Wedding Planner (in some cases), Valima Reception Venue, Full-Service Catering, Photography and Videography, Attire etc.

On average one spends from over a million to five million rupees. The cost of wedding has witnessed a dramatic rise over the period. One finds oneself beleaguered since the cost is increasing dramatically whereas income of household is almost static. There are some insurance companies which keep sending emails and text messages to the masses to invest for the education and weddings of their kids. The investors are lured with the fact that by investing only a meagre some on monthly basis, one can get a substantial amount at the time of maturity.

School education is getting more and more expensive and out of the reach of the millions of Pakistanis. An average school operating in a street in Karachi charges Rs5000/- (five thousand rupees) per month whereas elite schools charge as high as Rs18000/- (eighteen thousand rupees) per month and that too with bi-monthly upfront fee from the parents. Parents are cognizant of the fact that their kids would land a job with decent salary in case their education is from renowned institutes. The government has not been able to restrain the ever-increasing school, college and university tuition fees. One has to have tremendous amount of money to consider sending kids abroad for higher education. Saving and investing for the education of kids seem to be gathering momentum in Pakistan since majority of parents deem good education sine qua non for a secure economic prosperity of their kids in the future.


There are a deluge of investment plans offered by a myriad of organizations, however, one feels as if the amount invested would not get handsome returns and the value of money would depreciate rather than appreciate. Investment opportunities are galore in Pakistan, however, the saving culture and the long-term approach with patience is needed. Pakistan needs to have a real breakthrough in terms of promoting the culture of saving by the masses.

When it comes to saving, majority of Pakistanis neither like to save nor have the amount left to save after their expenditures. This has culminated in making Pakistan a country with a saving to GDP ratio of less than 15 percent.

Pakistan’s economy seems to be working on consumption-oriented approach where consumption is being preferred to saving. Consumption has been promoted over the period of last two decades, to be precise, which has caused an economic dent to Pakistan. On the contrary, it can be noticed that the neighboring countries have been able to augment their exports, curtail their expenses and promote the culture of saving. There must be a trade-off. Consumption-led growth could never be in favor of the economy of Pakistan. One gets tempted when even the banks offer consumer products on easy installments. Right from getting a cell phone to purchasing dowry for a bride is available on installments by certain banks, which at times lures even those who do not need it or do not want it. The temptation is too immense to be satiated. With all this happening around us, one finds it too difficult to save for the future.

More and more employment opportunities for the educated and skilled youth in particular should be the priority on the agenda of the government. With available opportunities at home, the educated youth would contribute to the progress and prosperity of the country and this would lead to the saving culture with the disposable income culminating in prudent personal finance.

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