When a 25 year old earns Rs. 500,000 gross, and has read ‘Retire Rich Invest Rs. 40 a day’ you think there is some chance that she will save for retirement.
Or at least save something, for some event, right?
Wrong. ‘Subra Retirement is for my Dad, I need to live it up’.
Here is a generation that is brought up by seemingly prosperous parents (who keep saying they are smart because their property appreciated!!) in a land of IM, I Phone, I Pad and Now Enjoy.
So the 5L ctc is converted quickly into parties, dresses, jewels, 4 wheels, ….and about 40k lying in the bank. Of course they pay no rent, no money for food, sometimes not even for eating out,….so the lifestyle expenses is ALL that they can manage in their ‘great ctc’. I also know of a 25 year old whose ONLY contribution to the house is filling up petrol in his mother’s car. He is good enough to drop his mother in her office – so that he gets to use the car for the rest of the day. Mom hikes a ride from a colleague in the evening.
Some of them have educational loans, vehicle loans, marriage loans and a social pressure to get to a Mortgage. Hmmmm what will these kids do? Or rather what should they do?
1. Get on a budget: even knowing on what they are spending how much is a great first step. So even if not a budget, just keeping an account of what and where and how much of the money going is a very IMPORTANT first step.
2. Start a SIP: At Rs. 500,000 salary, there is surely some tax to worry about so getting into a SIP in an ELSS makes sense. Do not worry about what happens when the DTC comes into force…etc. just start. A good big ELSS in a growth option.
3. Keep some money in a Money Market liquid fund, for emergencies. If it is kept in the SB account or a bank FD, the ease of breaking it is too tempting.
4. Take term insurance (especially if your parents are not so well off, and you think that at some stage later on they will depend on you), at least cover all your loans, and make sure your parents get say Rs. 25 Lakhs. If you are in a relationship…make sure that you talk money with him/ her too. It is as important as the other taboo topic!
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