Today’s generation goes for instant gratification. And that’s true. They are a good earner but at the same time they spend a lot. This generation’s maxim is “we want it and we want it now” And moreover this desire of theirs is well catered by the revolution in the retail sector in India and the advent of the menacing mall culture that has actually changed the spending habit of youth. The picture seems to be very rosy. This generation is very happy and enjoying life. But this is not so. Cases of depression, suicide, and distances in relationship are also growing up. The reason is that they are spending more than they are earning, thanks to the bank’s credit facility. Most of the youth spend the money prior to the next probable income. This actually creates the chaos in their mind and gradually a sense of emptiness and guilt prevails.
There are a few tips for spending, savings and investments, if they are followed, the younger generation can actually do away with all the monetary problems to a large extent.
First of all, whatever the earning is, it should be divided into 60:40 or 70:30 ratio. 60 or 70 percent of the income is more than enough for spending. Spend the money freely. The problem is that when they spend they don’t spend freely, because with the very first penny, the sense of saving is there at the back of the mind, taught to them in a very grave voice by the elders, and hence guilt factor that “I am not saving”, is there. For economy to move up spending is equally important as saving and investment. So spend freely but strictly with the 60-70 percent limit. No guilt should prevail.
Secondly less and less use of credit card and more use of debit card should be brought into practice. Debit cards keep one in boundary where as credit card increases the virtual or it can be said false boundary where they end up spending endlessly (obviously within the limit of the card) to regret in the next month when the payment is due.
The 30 percent of the earning can be saved and invested in different portfolios. Saving should be done into two parts based on the liquidity and profitability aspect. Like for example some part of the saving should be invested in risk free bank FDs as they are highly liquid and at the time of emergency they can be redeemed with a very minor loss. Profitability is compromised here. Some amount should be invested in mutual funds as they grow handsomely but with time. They yield good money but it is not the money for emergency. So some target based investment in mutual fund can be done. The insurance facility should be availed to keep ones free of many hassles in life.
And lastly 70:30 is not the hard and fast rule, the month where more premium are to be paid, spend less. After all it’s your brain, control it.
Always see yourself happy…moneywise.
About the Author
DR. ANINDITA SHARMA
Dr. Anindita is an associate professor in Jaipuria School of Business, Indirapuram, Ghaziabad.