Myths About Saving Money Debunked For The Indian Millennial

Millennials tend to get a bad rap as a generation that doesn't save money. And it's true to a certain degree. All of us love splurging and partying and assume that spending today is better than saving for tomorrow because who knows what tomorrow holds for us. But what's also true is that we all need emergency savings to protect ourselves from unplanned expenses. And we all need retirement savings to pay our bills later in life.

Like with most other things, there are plenty of myths and misconceptions when it comes to money too. For instance, some of us were told to save up at least 10 per cent of our salaries every month. However, hoarding cash and tucking it away in banks isn't going to help anything and if you have a moderate salary saving up in this manner wouldn¡¯t do much.

The sane thing to do is to understand the nitty-gritties of saving money and the multiple factors that come into play. On that note, here are some important myths that surrounding savings that need to debunked:

Myth 1: There's no need to save till the age of 30

Twitter

Reality: Many of you in your 20s keep delaying saving any money assuming that you¡¯ll need to do it only after the age of 30. But that¡¯s a costly mistake. Start considering something as simple and efficient as a systematic investment plan (SIP) of a mutual fund. In this scheme even you start saving Rs 2,000 a month from your salary, there be a triple-fold increase in the amount after a certain defined period. In SIPs, your amounts get invested automatically at fixed intervals and there are chances of continuing the investment for a longer period are higher. SIPs undeniably enable you to invest in a disciplined manner.

Also read: 8 Ways The Indian Millennial Can Manage Money Better

Myth 2: There¡¯s no need for a PPF account

Twitter/Picture For Representation

Reality: According to Business Today, a PPF account allows you to claim deduction under Section 80C. Second, the interest income is tax-free. Third, the lump sum received at the end of the tenure is also tax-free. Stop thinking that you are too far away from retirement; it's always a good idea to start saving early.

Myth 3: Shopping during a sale is the best way to save money

unsplash

Reality: Sometimes, you can't beat money-saving deals, online or otherwise in the form of flat 50& or 40% off. Unfortunately, those have the potential to ruin your savings. Buying in bulk, couponing, and spending more to get free shipping are other common sales tactics you've likely been a victim of but they only add upto bigger losses in the larger scheme of things. Mapping out what you need as opposed to what you want will help you save a lot of money. That does not mean you live a frugal life, it¡¯s about being controlled in your expenditures.

Also read: How To Manage Household Finances Better In The Middle Of A Pandemic

Myth 4: Writing down expenses in a diary is pointless

Reality: An easy way to improve on saving is to start following a budget. That way, you'll have a clear sense of where your money goes every month, and you'll be able to easily identify spending areas you can cut back on. And if you're not saving money because you really can't afford to, and you have no reasonable expenses to cut, then looking for an alternate income source is a good option.

Myth 5: Personal loans involve a long processing time

Reality: According to Financial Times, borrowers often don¡¯t apply for a personal loan assuming it involves a relatively longer processing time and a cumbersome approval process. But personal loans are usually disbursed within two to seven working days because submitting the loan application is done with minimal documentation depending on the bank. Additionally, those with existing loans are always eligible for personal loan.

Also read: Did You Have To Take A Salary Cut Due To The Pandemic? Here Are Some Ways To Manage Your Money

Myth 6: Credit cards make spending easy

Reality: A credit card certainly makes it convenient to spend. Users are not very bothered when swiping a card or shopping online because they don¡¯t feel the pinch of paying hard cash. However, a lot also depends on how financially disciplined an individual is. There's the monthly interest on the amount spent and a good credit score to consider. Unless absolutely necessary, avoid using a credit card.