The word “millennial” leads to a large number of stereotypes in India. Millennials are termed as self – absorbed, short term planners and independent. However, when we look at millennials, we might find that they are probably good; in fact better in managing money than any of the previous generations and that these stereotypes are myths.
“Millennials” the people born in 1980s and 1990s are more financially literate than the previous generations. But they are still unwilling to financially plan their savings through professional help. Millennials are earning more money due to the growth of skills and a number of MNCs willing to pay higher packages than their Indian counterparts in the country. Not only Banks, millennials are aware of other financial instruments like PPF Accounts, Liquid Mutual Funds and are willing to invest first and then save.
Previously, Financial Planning involved planning based on the strategy of saving. Only 27% of millennials seek professional financial help. Millennials choose to find out information online rather than seek professional financial help.
A large number of millennials in India are high on debt drawing. The maximum used debt instrument of customers in India is credit cards. 52% of Indian millennials own a credit card. Out of the 52%,a large number of people are single credit card users. Thus, credit cards are one of the major reasons why millennials do not financially plan their savings because they do not have the time to plan and decide to live on the credit duration of the credit card rather than seek professional financial help
The savings habit of Indian millennials is largely dependent on the following factors:
Peer pressure and its influence are known to one and all. The philosophy your peers towards savings largely designs and influences your saving habits. As the saying goes, ‘Birds of the same feather flock together’, saving habits of millennials are very similar to their peers. Retirement patterns are largely dependent on peer philosophy and thee lifestyle of millennials largely determines their savings philosophy.
For millennials, time has become more important than money. Reducing the time required for opening an account, maintenance of the account, digital transactions are larger priorities than choosing how to save money. Millennials have become accustomed to this quick and tech-savvy world of digital transactions that makes banking faster and better. In addition to saving time, digital transactions and digital banking also has other perks like cashbacks, lower transaction charges etc.
The primary savings goals of the previous generations were health and well being of the family and children and purchase of their first home or their first car. This has changed to luxurious experiences in order to fulfill their needs. Millennials prefer to spend on experiences rather than tangible assets. Thus millennials prefer to save money on experiences. They are more willing to save money to visit various cities and travel across the world rather than save money and financially plan their savings.
The myth that millennials are homogenous must be broken because it is no true. The behaviors of millennials differ from each age group. There is a major difference between the ages of 18-24 and 25-29. The people of age group 18 -24 save smaller amounts as compared to people of the age group 25-29.
The Business Standard report pointed out that the households headed by persons in the age group of 26-35 years, paid more insurance premium than their senior counterparts.
Accounting for nearly 27 percent of the world’s 7.4 billion population, Millennials’ contribution to the Indian consumer segments is particularly noteworthy. The population cohort represents nearly 34 percent of the Indian population and unlike other developed countries; this generation is among the chief wage earners in the household in India.
Unlike previous generations, where savings rate was 35 %, the millennial savings rate is only 10 %. The report highlights that millennials primarily prefer offline retail modes and are gradually shifting towards the online mode, given the convenience and wider options on online channels. (India retailing)
Tags: savings, savings habit