Financial Planning Among Public- and Private-Sector Employees: Evidence from 800 Salaried Workers in Jaipur, India

Abstract

The financial planning of public employees and private employees in jaipur has its distinct difference in comparison to others and the demographic factors become a greater influence in financial planning than investment awareness does. The study employed stratified random sampling and a 36 item instrument with a Cronbach's α of 0.879 with 800 employees (400 public and 400 private) as the sample. The financial planning was assessed using financial attitude, knowledge and behaviour and four hypotheses were tested using the chi-square test, t-test, one-way ANOVA and linear regression. Demographic factors (gender, age, income, education and sector) had a significant impact on financial planning (all p < .001). Knowledge of investment opportunities was a strong but weak predictor (β = 0.151, R² = 0.023). There was no significant independent effect for the retirement planning (F = 3.450, p = .064), indicating that retirement planning is a part of the overall planning. There were statistically significant differences between the two sectors (t = −2.314, p = .021): private employees scored higher in overall score, saving rate, and higher in budgeting discipline (84% vs 49%), tax awareness (79% vs 49%), and retirement readiness, while public employees had higher scores in budgeting discipline and tax awareness. Almost everyone (99%) agreed that financial planning is important, but it was not done consistently. The limiting factor is thus, not informational, but behavioral. The paper suggests, and proposes, the following sector-specific recommendations for literacy programmes, retirement scheme auto-enrolment, the promotion of emergency funds and behavioural nudges.