To everyone’s surprise, millennials are not as reckless with money as they are perceived to be. As per the ‘Aspiration Index Survey’ conducted by BankBazaar, 91% of the millennials today manage their own finances without any intervention. From managing daily chores to shopping and investing, the millennials are getting it all done more conveniently with technology taking over.
Digitisation has led to easy accessibility of information, helping this generation to take a different money route. Let’s look at what the millennials are doing to control their finances.
Opting for online aggregators
The tech-savvy millennials are using technology to compare investment options online and make purchase decisions accordingly. Fintech companies today offer banking and financial products including loans, mutual funds, insurance product etc. with minimal paperwork involved and in very little time. This doesn’t just help customers get the best deal but also get an overview of the market. Millennials are accessing all these information and buying relevant products remotely while sitting at home or while being at work.
Choosing appropriate assets
While the previous generation would mostly put their money in conservative investment instruments such as savings accounts and fixed deposits, millennials today pick investment assets based on their goals and the risk appetite they have given the investment horizon. For example, 56 per cent of the millennials today invest in mutual funds for their mid- and long-term goals, which indicates a significant shift in the choice of investments.
Millennials today start investing at an early age due to the various investment options available at their disposal. Especially with SIPs allowing you to save with an amount as small as Rs 500, millennials are starting early. And an early start ensures building of wealth, as the power of compounding works on the money constantly. This also helps inculcate a habit of saving on a regular basis.
Taking loan to buy appreciating assets
Not all loans are bad. And the millennials today don’t fret loans when it comes to buying a house, or opting for higher education. In fact, 61 per cent of the millennials are open to taking loans to fulfil their aspirations. Depending on their income and repayment capability, this generation takes loan to fulfil their goals. Loans increase your purchasing power at a time when you don’t have adequate fund to buy something. For example, to buy a house, you don’t want to wait till you save up enough to be able to afford it. This is because by the time you build a fund, the price of the house will go up and you will end up paying a lot more than what you would have to on the interest of a house loan.
Insuring against disease and death
The millennials today consider health to be their second priority after building wealth. Hence, they focus on physical and mental fitness. One important aspect in this is to insure self and family against death and disease. So, millennials maintain a good balance of both investment and insurance in their portfolio. 72 per cent millennials invest in life insurance to protect their family against untimely demise.
The author is CEO, BankBazaar