Skip to main content

Financial literacy among young people

THERE is a growing interest for financial literacy among young adults. In the last six months, I have had young graduates — most of whom who have taken up jobs to acquire work experience so that they can pursue a masters' degree later — asking me about financial planning. Also, there has been enthusiastic response from young BPO employees to workshops on managing money, organised mostly by their employers. Many think managing money is about learning the concepts, terminology and processes. Developing the right attitude towards money is perhaps precious at a young age, when people begin to deal with money they can call their own.

First, making decisions about money requires making sensible choices. It is about considering alternatives before deciding. Youngsters struggle with choices anyway — from the clothes they wear to the friends they make. They tend to be swayed by a number of external factors — peer pressure, fads and coolness quotient. Money choices need not mean stark rationality, but definitely require taking the time to make up one's mind, especially after considering one's specific situation. The ability to distance oneself and make a considered decision is a trait to be developed over time. Many grownups are unable to hold back the impulse when it comes to spending. It is important to hone the skill to not act in haste, but think through a decision. Keeping away from discount sales, last day offers, special prices, freebies and the likes is a good starting point. A good decision with money is made without being pushed into something in haste. Given the time, a good decision persists on merit and what could have been a bad impulsive decision fades off.

Second, given that money is a limited resource, allocation towards various needs is a tough challenge. All of us have memories of spending away our salaries too soon, and the painful wait for the next pay day. Making a budget may be an extreme case, but taking the time to make a mental allocation to key items that need money, and completing them first, is a good habit to develop. Without prioritisation, wasteful expenses take away most of the income, leaving too little for essentials. Borrowing from friends may not always be a palatable or available option.

Using the credit card only means spending the future income today. A mental allocation to various important needs and the ability to prioritize is another skill to develop. Using internet and mobile banking to set up auto debits for key payments, and ensuring these are completed before the money is available for other uses, is a good habit. It may be tiring to consider the money angle every time a spend presents itself, but mental budgets tend to bring about discipline over time and a control on ones finances.

Third, saving for the future is not something that crosses the mind of young first-time earners. There is a high level of confidence about the future and a fear of the unknown, is well, unknown. It is even seen as extremely conservative to set money aside. To save is to pay ourselves, from what we earn. But, it takes a while to develop that attitude. A good beginning point would be the ability to overcome the need for instant gratification. The emotional quotient needs to get better, so every need does not look like an immediate necessity to be fulfilled without delay. Living in a consumption age where spending is the new fad, this may be tough. But, the ability to postpone a desire is what would develop into the ability to save. Savings provides a much greater flexibility with money and enhances the choices one has in using money.

It would take a while to develop the right attitude to money, since much of it is shaped by one's upbringing and specific circumstances. But, it may be worthwhile to consider the independence that earning money brings in and to hone one's skills with money.

Popular posts from this blog

NPS - How much to Invest?

  Though the deduction offered under Section 80CCD (1B) is `50,000 , it is not advisable to put the entire amount at one go. It is best to stagger your investments across several months, much like the SIP strategy in a mutual fund. However, don't make too many small contributions. There is a transaction charge of 0.25% or `20 (whichever is higher) on every contribution. If you invest `500-1,000 every month, you pay `20 per contribution, which works out to 2-4%. Invest at least `5,000-10,000 at one go. Remember, at most `2,500-5,000 of this will go into equities if you have chosen the maximum 50% allocation to stocks. The rest will flow into corporate bonds and gilt funds as per your desired allocation. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver ...

Mirae Asset India-China Consumption Fund

Mirae Asset India-China Consumption Fund     Mirae Asset India-China Consumption Fund is the first of its kind fund that focuses on the consumption theme in Asia's two biggest economies India and China. It offers a flavor of both Indian and Chinese consumer stocks in a single portfolio $ . We are delighted to share that we have declared a dividend as below.   Scheme/Plan Quantum of Dividend (per unit) NAV of Dividend option as on March 11, 2015 (per unit) Record Date Face Value (per unit) Mirae Asset India -China Consumption Fund – Regular Plan – Dividend Option Rs. 2.00/- per unit (subject to availability of distributable surplus as on the record date) Rs. 18.302/- Wednesday, March 18, 2015 * Rs.10.00/- Mirae Asset India-China Consumption Fund is the first of its kind fund that focuses on the consumption theme in Asia's two biggest economies India and China. It offers a flavor of both Indian and Chinese consumer stocks in a single por...

Shriram Transport Finance FD

Shriram Transport Finance Co. Ltd (STFC) is self explanatory. They have decided to revise the Interest rates on "Shriram Unnati" Fixed Deposit w.e.f. 1 st April'15 . The revised interest rates applicable will be as given below:   Tenor Rate (p.a.)* 12 months 9.00% 24 months 9.50% 36 months 9.75% 48 months 9.75% 60 months 9.75%   *Senior citizens will get an additional rate of 0.50% per annum. This is only an advanced information, enabling us to inform our investors and advise them to take maximum advantage of current interest rates applicable till 31 st March,15.   Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under S...

EPF or NPS - Why not both?

  In the Budget, Jaitley also empowered the corporate employees to choose between the EPF and the NPS. The details are awaited but this could be a big change in the way Indians save for retirement. However, your employer must be ready to shift to the NPS as well. Should you shift to NPS if it is allowed? Experts say you should opt for both . NPS offered by corporates now is additional to the EPF , so the same structure should continue in future also. However, much will depend on the rules and whether employers and the Labour Ministry will embrace the change.     Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by inv...

Comparison of Tax Saving Funds

Comparison of Tax Saving Funds As on 11.02.2015             Scheme Name 1M  3M  6M  1Y  [%]              Rank [%]              Rank [%]              Rank [%]              Rank Reliance Tax Saver (ELSS) Fund(G) 0.99   51/59 7.52   33/57 14.34   22/55 88.54   1/54 IDBI Equity Advantage Fund-Reg(G) 2.44   30/59 10.1   17/57 25.85   1/55 85.12   2/54 Axis LT Equity Fund(G) 5.26   4/59 11.8   3/57 19.44   9/55 72.16   3/54 SBI TAX Advantage Fund-I(G) 6.28   2/59 10.28   15/57 8.08   48/55 71.13   4/54 SBI Tax advantage Fund-II(G) 4.44   6/59 6.44   43/57 9.52   42/55 68.87   5/54 ICICI Pru R.I.G.H.T Fund(G) 3.47   12/59 9.52   21/57 17.44   11/55 67.21   7/54 Birla SL Tax Relief '96(G) 3.19   17/59 ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now