An investment guide for millennials

Though most millennials tend to be conscious with their money, research has shown that they are putting their savings in the wrong places.

However popular the saving trend is within this generation, there are still a majority of investments going into maintaining a flexible career and lifestyle and a lack of investment going into a long-term financial plan. As a result, many are still struggling when it comes to efficiently managing their finances for their future.

Here are five simple tips to help a millennial ensure a healthier financial future:

*Budget: Are you spending more than you make? A budget will help you understand where you currently stand and how to get to where you want to be in the future.
Budgeting requires you take a step back and evaluate how you can better allocate your income so you can start investing in long-term projects. Your budget should include your fixed expenses, variable expenses, debts you may carry and your monthly expenditure.
Tracking your spending through a well-made budget can help you determine what sacrifices you can make today to achieve a financially secure future tomorrow.  Did you know you could start an SIP with Rs 1,000? The smartest way to grow your finances is to set aside a small amount of your income every month, because Rs 1,000 a month can make a large difference in the future.

Instead of letting your saving or surplus income sit in your bank account you could invest into mutual funds. 

You can set aside a fixed sum to invest in a mutual fund every month, also known as SIP or Systematic Investment Plan. 

*Tax saving: Most millennials realise too late that they could be legitimately saving their taxes and growing their wealth at the same time. To efficiently save tax, one must systematically plan well ahead of time.

Mutual fund investments like investing in tax saving funds (Equity Linked Savings Scheme) will not only enable you to earn tax-free returns with a short lock in period of only three years but also, have the potential of giving long-term inflation-beating returns.

*Indulge but be smart about it: Be it an expensive international holiday, an expensive handbag, shoe or dress, or tickets to the FIFA World Cup, saving money doesn’t mean that you have to deprive yourself of your aspirations or guilty pleasures.
Identify how much you will need to fulfill these aspirations, and include them in your financial plan.

For example, if you set aside an amount every month and invest it in a short-term fund — a debt fund, it can get you up to 8 to 9% in a year and you can spend on your indulgence without it affecting your financial well-being in the long-term or short-term.

*Health insurance: Your quality of life depends on your health, so it is imperative to have a good health insurance plan. Buying a good health insurance plan early on in your adult life can insure you from costly medical expenses.

Thus, it is essential to include in your financial planning and allocate funds for a health insurance policy and premium. Also, purchasing one when you are younger also attracts a lower yearly premium.

Finding the right type of health insurance requires a bit of research as often some plans may not fit your required criteria, but once you purchase one, it will ensure the protection of your savings and even end up paying less on treatments you may require.

You must always look at the protection of your health as non-negotiable when compared with other expenditure needs, even if you feel healthy at this moment.

Saving money for the long-term future is often easier said than done. But no matter how many changes you plan to make in your career or lifestyle, there is always a way to start saving for goals that will have a lasting impact.

Remember that starting now, no matter how small the investment, is better than procrastinating and putting it off for a later date when you might have fewer options to fall back on.

(The writer is CEO of Scripbox)