Anshika Khanna (name changed) was a 20-year-old student when she first understood the concepts of saving and investing. âMy roommate diligently wrote a budget and regularly listed every expense. She read a lot about personal finance and also invested in various asset classes.
Eventually Khanna got interested and began to do her own research on money management and soon after had gotten into the habit of investing regularly. However, Khanna believes it was luck that she was around someone who was financially savvy at a very young age, which encouraged her to take small steps towards financial independence. âIf it hadn’t been for my roommate, I wouldn’t have cared about saving and investing money in a disciplined manner as a student. Even if someone had advised me, I ‘Would have dismissed the idea because I had the idea that you just have to start thinking seriously about money management once you start earning, âsays Khanna.
In India, where financial literacy remains extremely low and basic financial education is not mentioned in school curricula, for most young people familiarity with concepts like saving and investing is only beginning. when they start to make money. The learning curve of managing finances is usually marked by many hazards, with certain experiences causing significant monetary losses. In the case of women, the road is more bumpy as gender stereotypes and patriarchal beliefs make it harder for women to learn the ropes of personal finance.
For Khanna, the early start in the investment world has helped her avoid the mistakes she has seen her peers make. âBy the time I started working, I had acquired a good knowledge of the range of investments and had developed a fair idea of ââinvesting according to your objectives, your risk-taking abilities and, above all, the ability to identify âmodes of investmentâ. However, some of my friends and colleagues struggled to understand that investing cannot be a one-size-fits-all approach and they lost a lot of money in the process.
It was this awareness of the gaping hole in the education system that led Khanna to also introduce her younger sister to the basics of money management. âAn important takeaway from my experience is that many women, even though they are fortunate enough to learn the ropes of the investing game, tend to slack off due to lack of self-confidence and perception. that their father, their brothers or their husbands or boyfriends will do. a better job. But, many don’t realize that relegating the task of money management to someone else, no matter how trustworthy that person is, means giving up control of your finances. As unpleasant as it may sound, all women need to be prepared for situations where they may not have their father, brother, or husband to turn to.
Preeti Zende, Founder of Apna Dhan Financial Services, says, âThere’s no time like your 20s to start putting your money to work for you so you can reach your financial goals well in advance. Developing good spending and saving habits and learning to budget and invest in your 20s can help you avoid unnecessary debt. It is that phase of life where you would have a lot of aspirations as well as opportunities. People in this age group have something that a lot of people don’t: time! Those who take advantage can prepare for early financial freedom.
While the determination to start saving and investing early can be a game-changer in the long run, knowing where to draw the line is also important. This is the age when obligations and responsibilities are few and where the desire to check off items from the idiomatic list reigns supreme. As a result, many young investors end up making incorrect assessments of their ability to manage their investments. Zende says, âWhen you are naÃ¯ve about investing, a very basic financial instrument like mutual funds is preferable. Mutual funds are suitable for all types of investors with varying risk-taking abilities and time horizons. If you are getting some pocket money or have started making money from your internships or summer projects, you can start investing in mutual funds for short to medium term goals. .
Zende further suggests: âFor short-term goals such as buying a mobile or laptop, you can invest in a liquid fund with banking RD. If you want to save some money for your graduate studies that you could resume in 5 years, you can consider opting for a balanced fund as well as a very short term debt fund. If you are about to start a job and plan to invest for the long term, simply start with a large cap or index fund and keep investing regardless of the market level.
Urmila Singh of S9 Financial Planners says knowledge of financial planning can go a long way in ensuring that young women stay in control of their lives. âConcepts such as inflation, the power of capitalization, contingency plans, investment possibilities, short and long term investment goals absolutely must be taught to all young Indian women. They need to know finance how well they know how to spool Instagram, know the latest fashion trends, be tech-savvy or even blog about food. The more you encourage these young women to learn about finances, the more you open the doors to confidence, growth and most importantly independence, âshe says.
Key points to remember
1. The Internet is a great place to start improving your financial literacy. There is a plethora of apps, websites that provide quality information for free.
2. Joining or starting a financial literacy group or club at your college can make the process fun and help keep you motivated.
3. You can start using budgeting apps to get in the habit of saving and tracking your investments and eventually you can move on to other personal finance apps through which you can invest in various asset classes .
This article is part of the HT Friday Finance series published in collaboration with Aditya Birla Sun Life Mutual Fund.