The budget is around the corner and all hopes are pinned on what the new government has in store for common citizens.
How much personal budgeting happens in the lives of the young Indian? Not much, it appears.
According to a global survey by Standard & Poor’s Financial Services LLC in 2017, only 25 per cent of young people in South Asian countries know how to invest smartly.
Three-fourths of the adult population does not understand even basic financial concepts, the survey says.
For developing countries like India, with a predominantly younger demographic, financial literacy is necessary for stability and prosperity and to avoid getting scammed by companies such as the recently busted IMA.
‘No advisors’
World-class companies work from the city but very few, if any, have financial advisors to assist lower-rung or middle-level employees with their personal finances.
“Mostly, people get assistance from wealth management firms or financial advisory sections of banks. They either approach us as part of their marketing or after we call them with a query. Then they keep calling and pestering us to a point when we become sick of the process and decide to go back to a trusted FD account,” says Lakshmy Varma, who works with an MNC.
‘Whom to ask?’
Jerin George, 30, employed with an MNC, has been thinking of investing his money for some time.
“There are no proper channels on the Internet; all you get are over-eager executives or advisors more concerned about their commission than your returns. How do you trust someone with your money without knowing if they are genuine or not?” he wonders.
He believes asking someone knowledgeable in the family is the safest bet.
Play it safe
Both Lakshmy and Jerin have invested in fixed and recurring deposits. “I am not interested in taking risks. Any extra funds I get, I park them in fixed deposits or places where I am assured the principal will not be lost,” says Lakshmy.
‘What dad says’
Tejas Udaykumar and Asha Udayan, both working in reputed companies, follow their father’s advice when it comes to investing money. They admit they don’t have much of an idea about investment avenues as “dad takes care of it all.”
‘...or ask friends’
Vasudevan Badiadka relies on his CA classmates, MBA graduate cousin, parents or colleagues to sort out money matters. “I don’t rely on commercial consultants at all,” he says.
He has invested in FDs, chit funds and an SIP-based insurance plan and wants to get into the stock market soon. “However, as of now, I am paying off my education loan,” he says.
‘No money to save’
Sruthy Ram laughingly admits to not having investing worries as most of her salary goes into paying off her loans and credit card bills.
“My husband does make plans about investing a bit every month but it mostly never materialises as savings are negligible,” she says. However, the couple invest in gold on her birthday, as a backup.
Vasudevan says most of his friends are too busy paying off loans to think of investing and saving.
Keep this in mind
Youngsters today are focused on decisions about spending, not saving or investing.
When it comes to investing
a) Understand what is a comfortable amount; this should be a personal decision and not based on someone’s suggestion.
b) Analyse your specific requirements. Know how you can access your money when you need it.
c) Do not push up your investments if you can’t keep them up. A small amount invested over time is better than a large amount ad-hoc.
- Hena Mehta, Founder and CEO at Basis, a platform for women investors.