It's something that a lot of us have been in denial about but it's time toface the truth: Millennials, like all other generations before them, need help to manage their money better. Before we dive into details about their relationship with money, it¡¯simportant to note that Millennials or the GenY in India comprise of 18- to 35-year-olds born between the early 1980s and 2000.?
According to?Economic Times,??they form about 46% of the workforce, they contribute 70% to the total household income and most of them have one united goal in life: to be wealthy. But are they on the right path to achieve this goal? From working professionals to those who sit at home, money matters are still sort of vague.??
Owning abig house and securing a safe government job, to overseas travel and achievingthe perfect work-life balance while still being financially secure, the Indian millennial's financial aspirations are being moulded by social media, movies and the news, but are they taking realistic steps to achieve their long term monetary goal??
Here¡¯s an overview of some of the most common errors and misconceptions aboutmoney and ways to mitigate the problem in a simplistic manner.
When it comes to having a concept of savings, the Gen Y stands out in stark contrast to Gen X who had one and only goal in their mind whileearning: to save. But Millennials with a penchant for travel, fancy gadgetsand the latest fashion, unfortunately, end up delaying important ¡®long-term¡¯ plans.
In comparison, Gen X possiblystarted saving and investing from the time they got their first paycheck. An ET?report states how people between the ages of 22to 35 years are mostly single and don¡¯t feel the need to save for the future and goon a spending spree.?
In other words, most Millennials have more disposable incomebecause many don¡¯t hold immediate responsibilities. It¡¯s time to re-think suchsituations and always look for avenues to save up whatever little amount youare making.
Asmentioned in the point above, Millennials usually see income as being disposable,something to be used for immediate purposes like paying house rent, groceries and dinners outside. That¡¯s how many of them are caught in thevicious loop of living from paycheck to paycheck. What many don't realise is that noting down even the smallest amount spent can give one a perspective on their spending pattern. It's a sure-shot way to cut down on expenditures.
Accordingto a report, 12% of millennials who aren¡¯tinvesting said they lack the right knowledge. When addressing long-term goals,investing through Systematic Investment Plans (SIPs) is the right way to do it. It does not matter how small orbig your paycheck is, you have to learnto live within that amount and keeping at least 15-20% from your salary for mutualfunds will yield positive monetary benefits.
As per a Live Mint report, a survey conducted between mid-September andmid-October 2019 shows that Millennials are more likely to take loans comparedto other age groups. Among Millennials, those earning higher incomestend to have more loans. Bigger-sized loans (more than Rs 10 lakh) are also moreconcentrated among higher-income brackets, shows the data. The self-aware might like to be financially independent but pegging it on loans and mounting debt isn¡¯texactly a financially wise choice to make.
Whether it's a new car, a wedding or improvements to the house,?when wesave it's usually because we have something in mind. But many don¡¯t consider saving for an ¡®emergency.¡¯ Putting money aside for things that are unexpected is always a good idea, butthe Gen Y doesn¡¯t consider this a priority and ends up squandering most of its cashon immediate needs.
Generally speaking, Millennials are bigger spenders when it comes to dining habits. This is especially true for those who live alone and are away from their families. A boom in the app-based food delivery setup has further added to this situation. To top that, eating outside food daily is taking away from your health. So if there was ever a good time to quit take-out food and save your money, now is the moment.
Many Millennials may recall the major stock market decline like the?Wall Street Crash of 1929 or the?Financial crisis of 2007¨C08. Still, some might only have the knowledge of popular character from American SitCom Friends, Phoebe being a stockbroker and just how stressful their lives can be. But no more than not, stock markets are an alien arena. While some are overwhelmed by the sound of it others are just not?interested to delve into complicated numbers.
A stock is a general term used to describe the ownership certificates of any company. A share, on the other hand, refers to the stock certificate of a particular company. Holding a particular company's share makes you a shareholder.?Amid the ongoing pandemic, however, there's been a major shift with younger people taking interests in understanding stock market investments.?
According to a CNBC report, technology stocks have emerged as the main trend amid the pandemic as remote working and social distancing measures have boosted demand for digital services.?
Be it?student loans, buying or renting a place to live or having kids, all of these will need one to purchase insurance. These major life events for Millennials make it extremely important to have a financial security net.?Insurance provides essential financial protection for your future and so, no matter how complicated it sounds, it's important learn about its benefits and start investing some money in it.?