There has been a consistent hype about investing as soon as you start earning. If you are a millennial and have started with your job, there is no chance that you have been spared from the ‘Gyan’ of saving early and investing early. With 440 million in number, millennials cover almost 34% of the Indian population. Highly educated, self-reliant, and tech-savvy, these people are a breeze of fresh air but need to imbibe few principals from the fathers (baby boomers) when it comes to investing. The fundamental difference in financial management: Millennials vs baby boomers

Baby boomers or Gen X people were preservers of money. They spent less and saved more. Everything they did was about saving as much as possible. Be it retirement fund or emergency fund or a go-to fund, you name a fund and they have it saved. These are long-term people who live in the future. On the contrary, Gen Y people or millennials are the end-users. They earn hefty, spend hefty. Retirement for them is a ‘Tomorrowland’ concept which they are not sure of if it will ever dawn on them. these are short and ultra-short-term people who live in the moment.

Start your investment journey by investing in top mutual fund house like HDFC Mutual Fund and plan towards your future.

Retirement planning

Conventionally, retirement date used to get fixed on the day an employee used to join at work. With salary coming in hand every month, retirement funds were secured already. This was the case with baby boomers. Whereas when asked about retirement, millennials have an expected response. Retirement is the farthest ever event they can think of in their life. What is the point of thinking about something which is around 25-30 years away?

Retirement planning can be delayed until 35-40. Once at that mark, they are of the opinion of investing in highly rewarding securities like mutual funds, stocks, shares, etc being the risk-taker generation. You can invest in schemes from UTI Mutual Fund, one of the leading mutual fund investment companies in India.

Baby boomers preferred options like PPF, FDs and bank deposits to secure their fund due to their risk-averse nature. Millennials need to learn from baby boomers that retirement planning is a gradual process and needs to be started immediately.

Goal setting

Goals setting is a crucial part of planning your finances. Baby boomers focused majorly on long-term goals and ensured the future of their family is financially covered. Home, retirement, education, car, marriage are few things they predominantly focused on when it came for future financial planning.

Millennials are more considerate about short-term goals and do not plan much ahead. Major life goals like retirement, child’s education, marriage etc are too far away for them to be planned right now.

It needs to be realized that time passes very fast and if not planned well ahead of time, these major goals of life can later become a burden. As time will pass by, the load of these responsibilities is going to increase further making financial management a tough game. Hence, it is highly suggested that millennials should start paying attention to these aspects of life as well and start investing as soon as possible.

The early you start investing, the more you would be able to gather as in the long-term power of compounding works behind all your investments, growing your principal amount exponentially and building your wealth. Invest with SIP which allows starting small, even Rs. 500 can help you initiate investing. One can choose a mutual fund scheme like Mirae Asset Emerging Bluechip Fund and invest in it.

Budgeting

With so many brands flourishing and many more entering the market every day, one thing is sure that the millennials love shopping. They are gadget lovers, fashion lovers, food lovers, travel lovers and so on. Another most surprising thing is that they do not refrain from spending the money they yet don’t have; Credit Cards. Even being fully aware of the fact that credit card companies charge heavy interest rates on delayed payments, there is no looking back when it comes to spending.

Baby boomers on the other hand always spend less than what they can afford or keep it within their budget. They strictly follow the budget they had decided earlier and do not stress their finances over one or two purchases.

Saving and investing is the priority after fixed expenses of the family, what remains after taking out fixed expenses and savings is the amount that can be spent over shopping and other luxuries.

There is a fundamental difference in the psychology of millennials and baby boomers. There is a lot that needs to be improvised in financial management for millennials to keep up with their future needs. The sooner they realize this, the better it is for everyone.

The Securities and Exchange Board of India is the regulator for the securities markets in India.

This piece originally appeared on TheAmericanMirror.com and is used by permission.

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