Millennials, as a group, believe in living for the present. They are clued in to social media and online trends, are tech-savvy, and comfortable using mobile apps for almost everything, whether it's ordering food, or a cab ride, or online banking and investment. With the availability of EMIs and easy financing, cost is no longer an issue when making a purchase.
Patanjali Somayaji, co-founder of the Walnut App, lists seven tips for millennials to ensure they maintain the standard of living they are used to:
1. Track Spends and Bill Payments Smartly, Set a Budget
Using apps that track spends makes this very simple. Not only are spends displayed and managed automatically, the app also shows upcoming bill reminders for credit cards and other utilities. Setting a budget ensures there is no overspending.
2. Save at Least 10 Percent of Your Salary Every Month
Living on the edge, or from one salary to the next, is not a good idea, and each month, it is prudent to set aside at least 10 percent of your salary towards savings as soon as it is credited. This can be an SIP in an equity fund or debt fund, or even a Fixed Deposit, depending on risk profile.
3. Explore Different Investment Classes
While most families in India have grown up with the belief that a Fixed Deposit is the only way to invest, there are many other options available, right from equity and debt mutual funds and stock markets to gold, real estate, art and so on. Appetite for risk should always be factored in before choosing any of these options.
4. Get Health Insurance Cover
"Live for the moment" seems glamorous, but an accident or medical emergency can lead to a financial disaster and impact lifestyle. When young, there’s a lower chance of pre-existing diseases and so the premium is much lower, and this should be utilised to get a Rs 5 lakh or even a Rs 10 lakh cover.
5. Get Tax Planning in Order
Avoid waiting till February or March, by planning tax saving investments from April itself when the financial year begins.
Once salary details are known, check tax liability and how much tax can be saved by exploring all avenues available. If planning to invest in Public Provident Fund (PPF) or tax saving mutual funds, start contribution early and monthly.
For mutual funds, set up a Systematic Investment Plan (SIP), so the money is invested each month and not a large outflow later.
6. Keep an Emergency Fund
Loss of job, an accident, or illness can strain your finances, even with health insurance. Once your monthly spend pattern is known, this emergency fund should take care of living expenses and upcoming commitments, and be easily accessible.
7. Stick to the Plan
All plans can go to waste if they exist only on paper; so self-discipline is extremely important to ensure all your spends are tracked, and investments are completed as planned.