7 money tips for millennials: From spends, insurance to tax, check out must-do list
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.
Millennials as a group believes in living for the present. They are clued in about social media and online trends, are tech savvy and comfortable using mobile apps for almost everything, whether it be ordering food or a cab ride to 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:
* Track spends and bill payments smartly, set a budget
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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.
* Save at least 10 per cent of 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 per cent of the 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.
* 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.
* Get a 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 are lesser chances of pre-existing diseases and so premium is much lower and this should be utilised to get a Rs 5 lakh or even a Rs 10 lakh cover.
* 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.
* Keep an emergency fund
Loss of job, an accident or illness etc cause a strain on finances, even with health insurance. Once monthly spend pattern is known, this emergency fund should take care of living expenses and upcoming commitments, and be easily accessible.
* Stick to the plan
All plans can go waste if they exist only on paper; so self discipline is extremely important to ensure all spends are tracked, and investments are completed as planned.