Gen-next makes its money work harder with help from financial professionals
They are smart and young. They live in the fast lane, earn more, spend more and now save more. They understand their money, set bigger goals with shorter deadlines. And, consultants help them take charge of their personal finances. There is definitely a changing attitude towards finances and savings.
“It took a while to get acquainted with numbers,” says Manish Gajjaria, 24, a software engineer working in Pune. “My idea of investment was to approach a stock broker. Now, I have diverted my money to equity linked saving schemes and mutual funds that offer immense tax benefits and also ensures steady investment,” he adds.
Help at hand
He says youngsters need guidance while handling money. “Most go in for random savings schemes in the first quarter just to escape the tax net. Now, I track my investments online and I am happy with the way they are growing. With consistent hikes, there is no dent in our regular spending,” he adds.
Just nine months into the job and Dhanya Mohan, who is 24 and works in Ernst and Young in Bangalore, is already into investments. “Though keen on saving taxes, I don’t want to take any risks. Soit is mutual funds. I took help from consultants to make investment decisions,” she adds. Educating youngsters on personal finance are ‘wellness consultants’. “All you need to do is simplify,” says Pradeep Yuvraj, director of Finerva Financial Education and Wellness Consulting Solutions, the only authorised users in India of the global Personal Financial Well-being (PFW) Scale where an eight-questions tool allows one to estimate the financial stress in an individual as low, high, mild and harsh.
“Most youngsters earn from Rs.10, 000 to 80,000, feel happy about their spending power, swipe credit cards generously, and become aware of the debt trap only after two years when the tax deductions begin in the salary,” he adds. And, the financial stress begins to mount. “Their productivity suffers when they are not able to manage their money,” Pradeep says.
The inability to handle finances creates an emotional crisis, says consultant psychiatrist Ponni Muralidharan.
“But youngsters, who are independent and tech savvy, find easy solutions. They learn about new age investment options and start investing, as there is surplus money at their disposal,” she adds.
Hemalatha Dhanapal, 29, who is now working with CTS, says even freshers are into tax-planning and take their money seriously. Finerva, with offices across the country, takes the education to corporate houses through a number of tailor-made sessions, counselling, presentations and e-learning modules to help employees rearrange their finances.
Most companies educate employees on tax compliance and tax savings. “We have regular, interactive sessions with representatives from financial companies and with our GM, Accounts to help employees plan investments,” says R. Shyam Sunder, Vice-President – HR of KG Information Systems Limited.
Setting realistic, specific and achievable goals is the key. “For instance, the easy way to realise the dream of buying a Mercedes Benz is to take a bank loan. But the question to ask here is, is it worth paying an EMI of Rs.40, 000 from a Rs. 50,000 salary?” says Pradeep.
S. Magesh, director of a 24 x7 Corporate Solutions India, says though such services come at a cost, they are worth it as any saving becomes lucrative only when it is backed by logic, and an informed decision.
“If they want to go in for mutual funds, we tell them the advantage of a Unit linked Insurance plan, which is a combination of mutual funds and insurance. We advise them against investing only in order to save tax (e.g a housing loan). At the end of 20 years, the income tax will be a lot lesser than the huge interest rates paid in the form of EMIs,” Pradeep explains.
He says that as professional consultants, “We draw a financial blue print for our clients’ future.”CASHING IN
Understand your budget and savings
Keep a record of monthly expenses