Money woes besiege us all! With our salary coming in by the 1st, and vanishing down endless Old Monk-sodden conversations, house parties and Netflix by the 10th, millennials usually have no money left to afford milk by the end of the month, let alone to save.
Anshu K, 20, says, “I’ve been trying to save every month, but living by yourself in a city like Mumbai can be expensive, and saving and finances aren’t really the first things on anyone’s mind when they get their salary”.
Savings, investments and finance are often seen as the domain of grown-ups, and seen as boring and uncool. Whether it’s the heady rush of earning one’s own money for the first time, or an endless list of things you absolutely must have, most people in their twenties end up having little money left over to save or invest. Let us explore the millennial spending trend, try to figure out why Indian millennials don’t save enough, and how we can start doing just that.
As a twenty-something just starting your first job, you might think that saving and investing are unnecessary evils. What do you have to save up for? With no responsibilities, and the endless cushion of parental money to fall back on, saving in your twenties is often seen as entirely unnecessary.
That’s far from the truth. No one can start saving one fine day. Saving is a habit that needs to be inculcated right from the start, or else it gets very hard to put away part of your salary, untouched.
Also, old or young, anyone can run into a rainy day. You could fall sick, have an accident, or get laid off. The smart thing to do is to have a contingency fund ready.
How To Save Enough
A general rule of thumb is to categorise your salary as:
30%– daily expenses
30%- to be saved
10%– entertainment, extras and movies
10% – insurance
10% -towards mortgages/EMIs etc.
If you find it hard to save 30% of your salary each month, do this: put away a small chunk of money in a savings account each month. Make sure you don’t touch this money for everyday expenses. Gradually work your way up to 30%.
Where To Invest
Once you’ve figured out the amount to ferret away, make sure you plant it in the right avenues, for maximum benefits. Mutual funds like HDFC DSP Blackrock and Birla Sun Life are a safe bet, while fixed deposits and Public Provident Funds (PPFs) provide a rock-steady, but low rate of interest.
Make sure to proportion a part of your salary for insurance purposes, and make sure to never mix insurance with investment. Insurance plans that seek to cover investment needs and provide cover, can often work out to the buyers’ disadvantage. So make sure to make your own investments and not take investment advice from insurance brokers.
Fire, car and medical insurance are the most imperative. If you’re fairly young and do not have dependents, you can skip life insurance. Make sure you aren’t over-insured, as that can be a waste of money. Try and get maximum benefit out of your company’s insurance plan. Hint: You can often get good coverage here, at a little extra premium each month.
Every adult needs to educate themselves on finances and investments. A little goes a long way, and your saving can really come in handy some day. If you’re lucky and that day doesn’t come, well, there’s always that Audi to splurge on!
Image Credit: Nikhil Mudaliar