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5 ways millennials can be smart with their money

Millennials should take advantage of technology and tools to avoid credit pitfalls
13 June 2023
    Blog

    By now, it has become quite clear that as a generation, millennials have a very different approach to savings and investments than their previous generations. As per the recent data, millennials are saving more than ever. Despite this good news, millennials still feel behind financially compared to peers and are juggling substantial debt levels with near and long-term financial priorities.

    So here are 5 simple ways to manage your money habits smartly:

    Plan, Prepare & Persist

    Having a financial plan in place is key. List down your expenses in order of priority and cover them one by one. What goals do you have? Identify your short, medium and long-term goals and have a timeline for all such events. Designate a budget for every expense. Consult a Financial Advisor to plan and take help in building your portfolio as per your goals & risk appetite. Incase you have a knack for investing on your own, improve your skills by taking courses, order online courses or enroll in various programs that will add to your skillset.

    Broaden your investment horizon; do not shy away from Equity

    Look for the right asset mix based on your risk appetite and goals. Have an overall mix of assets like equities and equity funds, bonds and bond-related funds, and other types of deposits.

    Investing in equity-based instruments is one of the best ways to counteract inflation and accelerate the long-term growth of your money. Set up an SIP to inculcate a habit of regular saving and build discipline. Successful financial planning not only entails investing regularly but also analysing investments every few years as goals could need to be re-prioritised with changing lifestyles and age.

    Do not forget to boost your contributions in small, steady increments and time the step-ups to your annual increments and bonus. Also include tax-saving strategies in your overall financial plan.

    Create a Contingency Fund

    Don’t let unplanned expenditures burn a hole in your pocket! Planning for what you know is going to happen is easier than planning for uncertain events such as job losses, medical emergencies, unforeseen circumstances, or any such event which you might not have expected. Such unexpected events could empty your savings and wreck your planning. It’s a good option to have funds dedicated to such contingencies which may or may not befall you.

    Eliminate debt & use your credit wisely

    One of the major investment complications for millennials is debt and loans to be repaid. As a first step, you need to prioritise the repayment of your loans. Make a list of all outstanding loans and then identify the ones that need to be tackled first. Pay off what you owe and then contribute that same amount to your savings — and watch your wealth grow.

    Using credit responsibly is an important part of a sound financial plan because your credit score impacts your ability to make almost any big financial purchases. Be sure to pay your bills on time and try to keep your balance well below the limit of the card. Take advantage of technology and tools to avoid credit pitfalls

    Start saving for your retirement

    There is only one way you can get it right – plan your retirement well and early. Just like the early bird gets the worm, investing early and when you have time on your side, you can benefit from the power of compounding and the length of time until retirement. Depending on your current lifestyle, calculate the retirement corpus you will need and start making contributions accordingly. A key tool that allows you to invest regularly, smoothen out market volatility and benefit from the power of compounding is Systematic investments in equities which could help in building up a sizeable corpus over the years.

    An Investor Education & Awareness Initiative by HSBC Mutual Fund

    Visit https://grp.hsbc/KYC w.r.t. one-time Know Your Customer (KYC) process, complaints redressal process including SEBI SCORES (https://www.scores.gov.in). Investors should only deal with Registered Mutual Funds, to be verified on SEBI website under Intermediaries/Market Infrastructure Institutions (https://www.sebi.gov.in/intermediaries.html). Investors may refer to the section on ‘Investor Education’ on the website of HSBC Mutual Fund for the details on all ‘Investor Education and Awareness Initiatives’ undertaken by HSBC Mutual Fund.

    This document is intended only for distribution in Indian jurisdiction. Neither this document nor the units of HSBC Mutual Fund have been registered under Securities law/Regulations in any foreign jurisdiction. The distribution of this document in certain jurisdictions may be unlawful or restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions. If any person chooses to access this document from a jurisdiction other than India, then such person do so at his/her own risk and HSBC and its group companies will not be liable for any breach of local law or regulation that such person commits as a result of doing so.

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