Financial Skills for Millennial
In 2020, the millennials will be
23-38 years old and will reach a crucial stage in life. It will be the peak
time in their career and major life events will take place like promotions,
marriage, children, travel abroad, and higher studies for some whilst paying
student loans or heavy EMIs for big purchases like a house or car.
The millennial generation has
completely different aspirations and lifestyles from their predecessor
generations. Therefore, the solution to their dilemma of managing finances is
also different. Here’s what can help:
1. Gain financial literacy: The term “Financial literacy” might sound
elusive but it’s not all maths and accounts. Knowing your finances will help you
in effective decision making as well as enhance your financial planning
techniques and debt management. Learn about options that will help you save
money and investments that will help you achieve your goals. Make use of
technology to find out about techniques that will save your money and track
your expenditures.
2. Build a
budget: Various studies on millennial
spending habits outline that they are influenced by their peers and social
media when it comes to spending or investing. On the contrary, your expenditure
and investments should be completely based on your goals which differ from
person to person. Create your own budget, stick to it and cut down on emotional
buying (honestly, this will help you save a lot). Your income should be divided
as 50% on needs, 20% on wants and 30% on savings.
3. Invest in plans which suit your goals the most: Millennials like to live life in
the fast lane. Most of who live recklessly from paycheck to paycheck while
pursuing an extravagant lifestyle with superficial goals causing financial
distress. You need to set your priorities straight and decide where and how
much to invest. Make a plan that encompasses your long term financial goals
(marriage, property, etc.) along with your short term goals (vacation, vehicle,
etc.). To gain more clarity on investments attends our session on “The Financial Well-Being”.
4. Borrow
less, save more: There is a vicious cycle of borrow-and-spend in our
life where every month we think this will be the last time but fail every
time. Be it borrowing from our friends and family or the worst- credit cards
and loans we resort to whatever is available. The interest we pay is like the
monster under our bed we were scared of in our childhood (except interest is
real). If you want to save money refrain from taking loans and cut down on the
usage of credit cards. Try to avoid borrowing as well.
5. Retirement
plan: It’s never too early to think about your retirement. Start
saving for your retirement at the earliest as it gives you more time to save
and leaves you with a hefty amount for your future goals (didn’t you plan a
world tour?). Don’t wait to repay your debts and fulfill other responsibilities
before you plan your retirement. Make a retirement fund as soon as you start
working and promise yourself to not use the money in emergencies.
Shahera Qureshi
Sushil Finance
Has
rich experience as a content writer. She has worked with Bombay Stock Exchange
(BSE) and has graduated in BMS. She is an avid reader and has impeccably
proficient research skills.