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News: Swipers to savers: Covid-19 has made millennials take a hard look at their spending habits-19-05-2020

https://economictimes.indiatimes.com/wealth/spend/swipers-to-savers-covid-19-has-made-millennials-take-a-hard-look-at-their-spending-habits/articleshow/75774424.cms

Updated On: May 19, 2020

Swipers to savers: Covid-19 has made millennials take a hard look at their spending habits

Coronavirus has turned the life of millennials, a generation that spends more and saves less, topsy-turvy

The coronavirus-induced lockdown is a great time to learn a new skill, life coaches have said. Rishi Padhi cannot agree more. The 26-year-old researcher with a multinational firm in Gurgaon has learnt to cook in the past month. Padhi, who shares a house with friends, has also learnt another thing: he can easily double his monthly savings if he is careful. Half of his salary goes towards food, travel and house rent. Then there is an education loan EMI of Rs 10,000. But the forced savings during the lockdown has made him realise he can invest Rs 1.5 lakh in his public provident fund account from Rs 60,000 now. The uncertainty the lockdown brought with it seems to have made him wiser. “There should be enough savings to see you through at least six months.” In Bengaluru, Mihir Mittal has had a similar realisation around expenses. This 24-year old professional photographer who specialises in food and product shoots had started a creative agency called Yellow Trunk just a few months ago. “Restaurants are shut so food shoots are not happening. Product shoots have also come down.” Earnings have halved, he says. “However, I now realise it is quite easy to save if you have to.” Covid-19 has turned the life of millennials — a generation associated with spending more and saving less — topsy-turvy. The lockdown and uncertainty have forced them to pause and review their lifestyle and spending habits. A generation that believed in buy-now-paylater is suddenly talking about saving for a rainy day. Professionals who face the risks of salary cuts and layoffs are learning to adjust with less money. “Financial planning was not on the radar of millennials,” says Dinesh Rohira, founder & CEO of Mumbai-based personal financial and advisory portal 5nance. “Just over a month of lockdown and they are now carefully looking at investments and liabilities.” Everyone should have at least six months of expenses covered, he says. That essentially means a microscopic look at where money goes and purge everything that is non-essential. Some like Padhi are lucky their companies have not talked about layoffs. But they have been affected by what is happening and around them. “How do you prepare for such an uncertainty? Having some money in hand makes one feel a lot more secure while dealing with such phases,” Padhi adds. In a survey among millennials done in February, 5nance found that young professionals overspend between Rs 400 and Rs 1,300 per week. “They will have to check this habit,” says Rohira. Things become clearer when people are aware of risks. The lockdown has forced a lot of them to examine their spending pattern. “Suddenly, millennials realise that cost of living is not so high but their cost of lifestyle is. They have started cutting back on the latter,” adds Rohira. 

Atul Shinghal, founder & CEO of online investment service Scripbox, says, “Millennials will be more cautious about spending their money. There will be a rethink in their attitude of ‘buy first and pay later’.”

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Shinghal recommends millennials should figure out side gigs for alternate sources of income, in addition to reskilling and upskilling. Crisis or no crisis, they should save at least 30% of the monthly income, he adds. Gurudutt Biswal, for one, has started treading cautiously. The 28-year-old techie in Gurgaon is putting parts of his life in freeze mode. “I have deferred marriage plans by seven years. Cost of children’s education is too high,” he says, adding that he wants to build a nest egg before starting a family. Biswal was move money savvy than most. So he had invested in mutual funds. But the closure of six debt schemes by Franklin Templeton has made him realise how uncertainty can ambush a person. Biswal is yet to give up on investments, though. “I have more money as expenses are less due to the lockdown. I am trying to conserve cash. But bank fixed deposits do not even beat inflation. So I am looking at investing directly in equities now. Some of these beaten down shares look very attractive.” Shinghal of Scripbox says most people should “watch out for wants masquerading as needs”. One should figure out which expenses should be cut to make your resources last longer, he says, adding that being risk-averse is not a bad idea. Kritika Padhy, 35, also thinks a person should not take financial risks. “I am risk averse and prefer fixed deposits,” says the communications professional. She has been able to save Rs 10,000-12000 a month now as travel and eating out expenses have gone. Her former stint at a private bank has helped her become more conscious of managing money. “Covid-19 has reinforced the thought that saving is actually a great idea.” Padhy, based in Delhi, says she has noticed that at least some of her friends have started saving more. Will Covid-19 make millennials the big saving generating?

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