Financial Planning Advice for the 15-20 year olds

Let’s look at how Centennials (typically those born around late ’90s & early 2000 period) in India can be imbibed with basic financial discipline at ripe stage setting a strong foundation for their later years.

1. Begin with an estimate of “necessary monthly expenses”, build these into a simple two-columnar table “budget” (with income & expense heads) if you must label it;

2. Create an “emergency fund” – don’t use this money on any lucrative, once-in-a-lifetime shopping deals, but only to alleviate an unforeseen personal debt, family, medical situation. Aim here is not to borrow from any source, but have a small fund to have without disturbing your savings discipline;

3. Set a “savings percentage” of your overall monthly income from all sources (after providing for “necessary expenses” estimate but before “emergency funds”) & stick to it;

4. Keep an eye on your “credit score” via CIBIL – as strange as it may sound, incase you use a credit card, have a bank account with your parents chances are you are assessed for your spending & financial habits. Always settle your credit card bills on time, do not engage in balance transfer practices. This will affect your credibility as you take car, home loan later in life.

5. Get a savings account jointly with either father or mother as second applicant. Every millennial in India is assumed to have two essentials for this purpose – AADHAAR and PAN card. Use this account to put in your monthly savings. Once you gathered a balance of say Rs.6 to 8000/-, you may want to ask your parents to connect you to their financial advisor to guide your through investment alternatives suited to your age, life phase profile.

I can’t stress enough the need to be an early saver, inculcating habits of an informed investor to amass wealth to fuel your aspirations as you grow up. If planned wisely, you would be able to splurge on your vacations, afford that upcoming mobile or pursue a responsible hobby without having to look up to your parents every now & then, leading you to a financial independence at right age.  «GM»