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5 toxic ways millennials and gen z approach finance in India

Young India is approaching finance in the wrong way

Growing up, most young Indians from middle-class backgrounds have a similar experience with money and finances. We were taught to be vigilant about our spending and saving but talking about money was frowned upon.

 

Even our own family’s exact earnings were not disclosed to us. Asking for the same from anyone was considered rude and impolite. Most of us carried this stigma around financial conversations into our adulthood.

 

This combined with the fact that all of us were bombarded with social media content and the culture of displaying wealth to the fullest has created some extremely harmful and dangerous perspectives toward money and finance.

 

Here are five harmful ways young millennials and gen z are approaching finance:

 

1. FOMO combined with instant gratification

 

One of the most common effects of internet culture has been the Fear Of Missing Out (FOMO). Young people these days view the world through the perfect and filtered lens of social media.

 

 

The consequence of this has been the rise in consumerism, especially that of materialist things that can be flaunted on these platforms.

 

Young millennials and gen z who are in the early stages of their working life view their salaries and earnings as a means to enjoy life to the fullest. While this, in itself, is not a faulty approach, the definition of enjoying life has changed drastically.

 

Earlier, it used to mean a comfortable present with a secure future. The secure future part has been completely eliminated these days.

 

Enjoying life is only about enjoying the present. Securing the future financially has become an exception and not the norm.

 

This is why so many young people are not investing or starting their health insurance as soon as they start earning. Most of us, even the ones with higher earnings live paycheck to paycheck and are prone to having our finances completely derailed by small obstacles. 

 

Moreover, the data clearly shows that most young earners in their 20s and some in their 30s have not even thought about starting a retirement fund. 

 

 

 

 

 

 

2. Waiting for the right time/knowledge/money to start financial planning

 

It’s true that the education system failed us by not making financial education a mandatory part of our curriculum but that cannot be our reason to keep on postponing planning our finances. 

 

It’s also understandable that most young people are intimidated to invest due to the lack of financial awareness and the unavailability of surplus funds. 

 

However, this is very unhelpful as this just keeps on delaying your investing journey and you lose out on the benefit of compounding. 

 

 

It is better to start investing with a small amount of money and learn through practice than to wait for the right time when you have acquired the right amount of financial knowledge or your salary is higher. 

 

You can start your investment journey with a SIP of just ₹ 100 per month with Kuvera. Like many other life skills, you will get better with practice and you can confidently invest larger amounts in the future. 

 

The idea is to build a habit of investing and prioritizing your finances as early as you can. 

 

3. Considering frugality as a bad thing

 

Frugality is the practice of being economical with your money and spending it judiciously but a lot of young millennials and gen z confuse it with being stingy. 

 

 

How many of us have delayed asking a friend the money they owe us just because we don’t want to appear stingy? 

 

How many times have you wanted to say no to a plan because it was stretching your budget but said yes or used some other excuse just to not appear stingy?

 

How many times have you avoided asking for a promotion, raise, or negotiating your salary for the fear of appearing greedy or ungrateful? 

 

Our childhood upbringing and culture have associated wanting more money with a lot of negative attributes. 

 

This is why many of us consider being frugal a bad thing. Even when we want to be frugal and enjoy the comfort of not having to obsess over the next paycheck, we don’t practice it. 

 

The truth is even famous billionaires like Warren Buffet, Mark Zuckerberg, and Azim Premji live a self-proclaimed frugal lifestyle. 

 

Millennials and gen z together need to change the stigma associated with frugality and embrace being judicious with their spending. 

 

4. Considering our parent’s money as our own and using it as an emergency fund

 

Most parents want their kids to have a comfortable life, they want to provide for their children and ensure their well-being. Most Indian parents go above and beyond to financially provide for their children. 

 

 

 

This has created a sense of entitlement amongst many of us. We view our parent’s money as our own even when we are well into our adulthood and have decent earnings. 

 

Many of us don’t have an emergency fund or health insurance because we see their money as our emergency fund. While it is acceptable to depend on your parents during your education, the practice of being financially dependent on them when you have started earning is detrimental to both you and your parent’s financial security.

 

It derails their finances and postpones you from becoming a financially secure and independent adults. 

 

5. Lack of discipline in financial decisions

 

This is one of the major problems with not just millennials or gen z but for all generations. Financial planning and investing work wonders if you are patient and consistent with it. But, most people lack the discipline to be consistent over a long period of time. 

 

It’s not like youth these days do not want to better their lives and secure their financial future. But they do it impulsively and in spurts. 

 

There are days when something or the other inspires us to put our life on track and we are determined to change our habits to achieve this. 

 

But this sudden burst of impulsive action fades away after a while and we go back to our usual behaviors. 

 

In finance, this needs to be avoided at all costs. Make small but sustainable changes to better your financial situation like following a monthly budget, start investing a small amount in tax-saving mutual funds, or start accumulating an emergency fund with goal-based investments. But be consistent with it. 

 

Bottom line

 

Most of the above practices are a result of long-term socio-cultural conditioning and it requires mindful and consistent efforts to unlearn them and adopt a healthier approach towards money and finances. 

 

In recent years, this change has been apparent as more and more young people are taking charge of their finances and practicing responsible financial behavior. 

 

The existence of online investment and financial planning platforms like Kuvera has made this easier than ever. There is no need for hefty paperwork or trips to the bank in order to better your financial situation. There is also a plethora of reliable financial information to collect financial knowledge and increase your financial awareness.  

 

Read more: Zen And The Art Of Investing

 

Watch/hear on YouTube: NPS Retirement Savings With Tax Benefits

Start investing through a platform that brings goal planning and investing to your fingertips. Visit Kuvera.in to discover Direct Plans and Fixed Deposits and start investing today.

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