Us Gen Y, a.k.a the millennial generation are often looked at differently by the previous generation. It’s but natural. Our parents grew up in tougher times where the set of priorities were much different. And one of the biggest complaints our parents have about us, are our spending habits. They saved for a house, for vehicles, and most importantly, for us. But does our generation think the same way?
Let’s face it. We are getting old. And by old, we mean those born in 1990 are nearing their 30s. And yet, most of us still share memes online joking about everything because just like Chandler Bing, serious discussions make us awkward and uncomfortable, especially financial. Unless you were brought up in a household that has a background where everyone worked in the financial sector, it is difficult to find an average millennial with all aspects their financials sorted out.
Saving for self is itself has become a huge task, forget saving up for kids, or even five years later. Vikram Poddar, finance expert, investment banker-trned-CEO of Boredroom Comedy says that today’s generation is about instant gratification “however, what they do not understand is that it is important to invest time into knowing what exactly they are investing in. The traditional methods of LIC policies, and fixed deposits will not work that well today. they should be considered on risk profile as younger people can take products with higher equity like SIPs because typically they can afford a higher risk profile. Gen Y is more focused on spending than saving, and therefore will focus on really short term savings, not thinking about ten years later,” Poddar says.
One of Warren Buffet’s golden advise on wealth management is ‘Do not save what is left after spending but spend what is left after saving’. Poddar agrees on this and emphasizes on the fact that our generation believes in splurging – not just for personal gratification, but for social validation. “We end up spending on partying, clothing and weekend getaways without really thinking about the bigger picture. So even if they had to save it would be the amount left from whatever is left from the splurge – which may not be much,” Poddar says.
According to a report by the The Times of India, millenials form 34% of the Indian population and 46% of the workforce. Most are postponing saving for long-term goals, job hopping like it is a trend, and have zero stability, or even the desire for it. Since their health is at its peak, they see a lesser need for health insurance. The generations long term goal involves buying a house, a vehicle and other luxuries.
CHILD PLANS, YOUNG PARENTS
We see an awful lot of our school friends getting married, and some have even begun to raise kids. No there are options like the ‘Child Plans’ several companies offer, but Poddar warns new parents against them. “With a lack of awareness, there is a higher chance of being handed a bad product with minimal returns. One needs to sit with an investment consultant and plan that if by 2030 the child is going to college, X amount is what is required to be saved, and then plan accordingly instead of walking blindly into a scheme with the label of ‘children’s plan’ on it,” he says.
And perhaps there is also the factor that most of the millennials are choosing to be single for a longer period so therefore have have less responsibility. Kids, education, weddings, house, retirement – these are the things our parents thought about. There is a stark contrast in the investment patterns - those who even choose to invest now go for mutual funds and SIPs, rather than the traditional options like life insurances. Insurance is meant to be bought for protection and not investment purposes.
Saving needs to become ‘cool’ as this is a generation whose motives are fueled by social media trends. Social validation is what matters. Need an incentive to save. With more and more people choosing to stay single longer, and pursue their passion of travel often looked down upon by parents’ generation, the idea of saving for the coming generation is still in question. The Gen Y has perhaps thought of savings, but at the same time is moving through hit-and-trial attempts when it comes to looking at investments for future.