Top Financial Goals for Millenials

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The times are changing and so is the attitude of Millennials towards money, investments and financial goals. Here are the five most common personal finance goals for the practical Millennials:

 

  1. Increase income to match living expenses – The present working generation understands the importance of continually earning more. As cost of living is rising gradually, it is important to supplement your income to match the living expenses and be able to save for other life goals as well.
  1. Save to enjoy life before retirement – Instead of solely focusing on the golden years, Millennials want to earn more to enjoy more. They are not averse to spending money on travel, food, luxuries and other good things in life. A great idea, indeed, if you can balance your expenses and dreams with your investment goals by setting an effective household budget and sticking to it.
  1. Own a house – Despite numerous blogs, articles and financiers harping about the advantages of renting over buying a house, buying a property remains a coveted dream for most, especially due to the emotions attached with owning a property and family pressure to buy one’s own home. However, investing in property crops up its own challenges and keeping the maintenance and other associated costs in mind, investing in equity over longer time-period may provide better returns.
  1. Quality education for children – A goal that is a part of every list is to ensure quality education for their kids. As the cost of education rises phenomenally, it helps to plan your child’s education in advance. Investing regularly in mutual funds aligned to the educational milestones in your child’s life will ensure you can provide for her education, anytime.
  1. Retirement fund – More and more people are realizing the importance of saving for their hey days and are increasingly investing towards building a comfortable retirement fund for leading a respectable life in the later years. However, little do we realise the benefits of starting early and consistently investing towards the retirement corpus as every year of working life must contribute towards funding one year of retirement and any saving breaks will significantly affect your corpus as a whole. A smart idea would be to systematically start investing in mutual funds via SIP or Systematic Investment Plan, starting as low as INR 1,000 per month.

The market is full of financial advice and investment products that can confuse any investor. To make informed investment decisions, it is prudent to consult a financial advisor who can help you understand your financial situation better and suggest investment options in line with your financial condition and vision.

Nave Marg, represented by Goa’s own financial doctor, Dr. Celso Fernandes; author of “Who says money doesn’t grow on trees”, has been on a mission to educate and inform people about the importance of investing, helping them set financial goals, and letting them realise the merits of investing from an early age.

How many of these financial goals form a part of your list? Drop a comment and share your top financial goals.

 

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From Juvenile to Millionaire in a decade

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You cannot grow rich overnight, isn’t that what everyone always told you. You must slog your entire life to live decently, isn’t that what the popular notion is?

Well, you are not wrong when you say you can’t grow rich overnight; but you can definitely resolve to grow rich overnight and make it a reality within a decade, instead of slogging and living a mediocre life forever, by following these simple ideas shared by NaveMarg Financial Consultants:

Make more money – The first step towards growing richer is focusing on making more money. Yes, if you are content with what you are earning now, how can you grow financially? Whether it is doing an hour of overtime every once in a while or picking up a freelance job few hours every week, look for ways and means to supplement your income and earn more.

Pay yourself first – An important principle all millionaires swear by is to ‘pay yourself first’. As a young adult settling into your first job, overcome the temptation of splurging all your hard earned cash and pay yourself 25% of whatever you earn before setting out to pay your monthly bills or spending your money in anyway you like.

You may find it unsettling at first, wondering whether you can afford your routine life by paying yourself 25% of the salary first. But that is the catch – by setting aside a certain portion of your income before you even set your eyes on it, you will train yourself to manage within 75% of your income.

But what to do with this 25% of your income you will ask? Invest it.

Yes, make your money work for you by investing it in well-performing assets aligned to your life goals. Do not touch this money even in th case of an emergency.

Tip: Build an emergency fund by saving 10% of your salary every month so that you don’t need to touch your investments in any case.

Thoughtful investments – Property, stocks, gold, PPF and FDs are some popular investment options. However, stocks, more particularly equity investments, have outperformed all other asset classes over a long-term horizon of over 10 years.

While property remains a coveted choice for many investors, the cost of maintaining a property and exit costs when you decide to sell it make it a less viable option compared to mutual funds that are also more tax effective. (Property Vs. Mutual Funds? Read more here…)

Get insurance – An unusual tip to figure in the list, getting insurance is the bedrock of building financial wealth. An unfortunate accident or illness can leave you completely drained of your investments. Having health insurance for yourself and your future family will help you save significant medical charges.

Taking a simple life insurance plan (not a ULIP) earlier in life will also ensure lesser premium and lifelong protection for the well being of your loved ones in case of any misfortune.

Have a rich mentor – Most of us brought up in the middle class never learn to dream big. Having a rich mentor and following their financial strategy closely can give you big lessons in wealth creation. As a youngster, choose your favourite millionaire and follow their ideas and passion for wealth creation to be a millionaire within a decade.

So are you all set to start building your wealth?

 

 

Make your teenager financially disciplined

Make your teenager financially disciplined

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In the current scenario, teaching the three Rs to your kids is simply not enough for survival. Home schooling children, especially teenagers, in finances is extremely important to ensure they become money wise at an early age to save and spend responsibly throughout their lives. In fact, teaching children financial lessons at 13 may mean wasting few hundreds, however, it will help them avoid mistakes costing hundreds of thousands when they grow up.

Setting financial goals, investing wisely, compounding and inflation are basics of finance that every child must be acquainted with, preferably through experience. Many forward-looking parents begin teaching their kids the importance of money when they are as young as 3-4 years old by simply rewarding them with cash for running small errands around the house that kids can use to buy their favorite toys – teaching children the importance of hardwork and making financial decisions.

But it is better late than never. Start teaching your teen important lessons in money to make her financially disciplined with the following ideas:

A budget – Give your teen a budget. Ask her to write down all her expenses – coffee, movies, shopping, fast food…everything. Remind her to review it on a weekly basis and rest assured she will be stunned at the figure all the fringe expenses amount to. This will be the right opportunity to explain to her the difference between needs and wants. By spending all her money on coffee with friends, she may not be able to afford the sports shoes she needs.

Goal Setting – Teach your kids the importance of goal setting by asking them to save for something they really want. If your teen wants an iPad, ask her to find out the price and work out with her how much she needs to save each month to reach her goal.

Spending wisely – Work out how much you spend on clothes or accessories for your teen and hand her the money to shop for herself one month. If she makes the wrong choices or splurges, landing herself in a spot, resist the urge to help her financially. This will give your teen an invaluable lesson in spending wisely.

Saving monthly – It is good practice to let your teen earn her pocket money and better practice to teach her the concept of ‘paying yourself first’. To demonstrate the benefit, show her the numbers on an online calculator revealing the magic of compounding.

Handling plastic money – As most young adults reel under credit card debts by the time they start earning their first salary, make it a habit of telling your child you are using borrowed money everytime you swipe that credit card. Go a step forward and show her the receipts spelling out the high interest rates.

Financial discipline is one of the most important life skills you can impart to your child. Learning the importance of hard work and the value of money at an early age will help them set effective financial goals for the future and invest wisely to achieve them. Taking guidance from a financial advisor to invest your child’s savings can propel them on their journey to riches. Act now to create a prosperous future for your teen.