Why do twenty-somethings hate saving money for the future?

Dev Patel, 28, is a Software Engineer, with a well-funded startup in Bangalore. He resides in a fully furnished 2 BHK apartment in Indiranagar, with his two labs. Despite earning a six-figure salary, he doesn’t have much to show for savings. An impulsive shopper, Dev, is the kind of person who buys a product if it catches his fancy, regardless of his ability to buy them. His credit cards bear most of the brunt when he buys expensive items. Although he pays back before the due date, he has to borrow from friends at times. 

When asked about why he does not save for the future, this is his response-”I am too young to be saving for the future. There is a lot of time before I should restrict my spending. I earn a lot of money and I deserve to spend it on things I love. I live for today.”

Life is perhaps more difficult for someone in their 20s in this generation- too many choices and even bigger distractions. Youngsters are worried about job security as layoffs have become normalised. With the pandemic, their worst fear came true, either they lost their jobs or live with the fear that they might lose their job any day. Given the scenario of businesses in the market, the fear is understandable. 

Here are five reasons why twenty-somethings are not into saving or investing

1) Keeping up with the Joneses

It is an idiom which refers to our innate need to keep up with our peers even when it doesn’t make sense to do so. When you get the news that your classmate friend purchases a flat in Bandra, Mumbai, for two crores, you feel left behind when you have a cheaper flat. What do you do? You try to match it or buy an even better one and put yourself in the almost-fatal cycle of EMIs and debts. Many people make this mistake, especially with social media, which gives you an instant dose of dopamine or makes you feel empty, based on which side of the grass you are on. 

2) Lack of financial knowledge

Another reason why youngsters don’t save or invest is because they are ignorant of the financial tools that they should use. Most financial institutions push products that might not personally affect the financial well-being of the investor. Lack of trust in financial institutions stems from this. 

Not being aware of how financial instruments work is why there are people flocking to get themselves a credit card. Let’s say your credit card’s interest rate is 3.5% for a month, most youngsters don’t think too much of it, but in reality, the annual percentage rate is 42. For example, a 10,000 rupees product purchased at a 3.5% rate would have you end up paying 14,200 if the EMI is for 12 months. 

3) Investing isn’t a priority for youngsters

The expenses that a twenty-something has will be completely different in a few years. Splurging thousands on a single day at your favorite pub might not be the smartest thing to do, but if you aren’t financially aware, it might be too late. 

The right time to start saving for the future is now. Tuition expenses for your kid’s school, EMI for your house, medical bills, etc., cannot be avoided. As a responsible adult, you need to think years into the future when it comes to money. Finding yourself at the crossroads of life without money can be devastating. 

4) They think it is too risky

Yes, it is risky, but not when you are armed with the right financial tools and people to help you. The only way to multiply your wealth is by investing. On December 31, 2009, the stock value of Avanti Feeds was at 1.66 rupees and it grew by over 34,200% to 569.30 rupees on December 30, 2019. Let's say you had invested 1 lakh Indian rupees in 2009, the value of your stocks would be 3.43 crores in 2019. 

The ones who took that risk made bank. It is not a one-off case, there are many businesses that are looking for investments and if you do your calculations right, you might end up multiplying your wealth. Investing in stocks isn’t your only option, there are many more: Fixed deposit, Recurring deposit, Mutual funds, Real estate, Gold, etc., based on your risk appetite. 

5) They think saving and investing is complex

The entire process of setting up an account for any financial investment can be a tad too tedious for youngsters of this generation who are used to “one-click” services. Amazon made E-commerce easy, Swiggy and Zomato made food ordering easy. You could hail a cab using Uber, with just a few clicks. The user experience of most services these days is simply terrific. Contrast that with setting up your savings account- you need to send hard copies of documents, visit the bank, set up video calls for KYC registration, and whatnot. The entire process puts off most youngsters. 

With the increasing internet penetration, high speed data and new age mobile-based applications, youngsters have access to almost everything at their fingertips. 

There are numerous apps that helps you in effortless banking and seamless investment experience and at branchX, we are value adding with - Xenie, your personal Genie, who shall assist you fulfil your wish via saving, your desire with instant credit and your dreams via effortless investments in the brands you love. 

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