Ketan Tanna finds that the notions of saving and investing tend to come up only after marriage and family come into the picture
Even though he has been earning well since he was 21, Anand Methwani, now 27, is not exactly well off. He shares a one-room tenement on the sixth floor of a building built under the SRA (Slum Rehabilitation Authority) in Malad. His roommate, he says, is an untidy pig, but Anand cannot afford a bigger, better place because he simply does not have the money.
How does one explain his plight? Well, money and Anand do not go well together. Anand, a senior professional in a technology company based in Mumbai, has a near zero bank balance, despite the fact that he has been earning for six years now and has no dependents.
LIVING IN THE MOMENT
Anand, like many others of his tribe, is a single man with no plan. For, financial planning in India is generally seen in the context of the family. Unmarried professionals, especially those without dependents, tend to be lackadaisical when it comes to things like health insurance, retirement savings and money towards a mortgage. Why bother with insurance when you are young and healthy, or save for retirement when it is a lifetime away? And of course, youâ€™d prefer to rent rather than buy, right? The attitude is clearly, live for today.
If not that, then haphazard mistakes are madeâ€”including overspending, getting into credit card debt, or buying life insurance even though it is a product meant only if you have dependents.
Twenty-three-yearold Pankaj Sen, a media professional, is not one bit sheepish about his compulsive desire to spend what he earns and sometimes spends borrowed money as well. Image conscious, he wears only expensive branded clothes. Recently, he bought a spanking new phone for nearly Rs 12,000. His monthly salary is around Rs 14,000.
He was jolted out of his spendthrift attitude when his company set a deadline for its employees to give evidence of investment for tax planning. Pankaj, who was planning to spend Rs 80,000 for a laptop, has now diverted that money towards lastminute tax-saving investments.
He has a reason though to justify his spendnow-and-be-happy attitude. â€œThere were many things that I wanted badly during my college days. My pocket money was never huge as I come from a middle-class background. I can afford to splurge now. May be a Â few years down the line, I shall start Â Â Â planning. But now I want to enjoy life,â€ he says. Psychologist Harish Shetty says that todayâ€™s India has an EMI generation that believes in enjoying life. â€œThe Indian economy is doing well and there are those who want to live for today. Increasing globalization has accentuated this hedonistic trait in many young Indians,â€ says Shetty. There is a rider though. â€œOne must also keep in mind that Indians are being flooded by a variety of financial planning instruments like insurance schemes, SIP and mutual funds. So there are also many singles who invest in property and other avenues,â€ he adds.
COUNTING ON A â€˜HAPPY EVER AFTERâ€™
As for young single women, very often girls do not plan because they have grown up with the notion that real financial planning starts only after marriageâ€”and their future husbands will take care of that.
Thirty-six-year-old Shanta Saikia, a media professional with an online venture, says that earning women normally leave their financial planning to their parents or if married, to their husband. In her case, Shanta says that it was tough for her to save in the beginning because her salary till early 2000 were not too great. â€œItâ€™s only of late that salaries have risen and so have the number of investment avenues. There is greater awareness as well and therefore I have started planning, though in a small way,â€ she says.
KICK-STARTING WEALTH CREATION
The advantages of starting to invest early in life are clear. Ask any financial planner and the clinching argument for an early start is the power of computing, which gets you bigger cumulative returns over the years. That means, you end up creating greater wealth compared to someone who starts investing a similar amount later in life. (See â€˜Financial Planning For Singlesâ€™.)
But for those who want to, it is never late to start a financial plan, says certified planner, Kartik Jhaveri. â€œThe objective has to be clear when it comes to financial planning. Spend on your basic needs, but start planning early even if it is a small amount,â€ he advises. TNN