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GenZ, or the next generation, is poised to take on the world with their street-smartness, confidence and self-belief. They are tech-savvy and seek practical solutions to their problems. But when it comes to finances, how prepared are these GenZers?

According to a survey, 32% of the surveyed GenZ individuals of India said that are want to save more than they spend. While the number is impressive, it is not very high. Today’s youngsters should have a proper grip on their finances since age is on their side. When they start young, they can very well be on track to financial independence. 

In fact, early financial planning can help GenZ attain FIRE (Financial Independence Retire Early). The FIRE movement is all about achieving financial independence at an early age so that you can retire young. Today’s youngsters are all for early retirement. As per a survey conducted by Goldman Sachs Asset Management,  25% of the surveyed GenZ stated that they wished to retire by 55. If you also share the sentiment of those surveyed, starting financial planning early on is the only way to accumulate sufficient corpus to retire early.

How does GenZ start its financial journey?

With the host of tech-enabled resources available, it is quite easy for modern-day youth to start their financial journeys. Lessons in personal finance can be accessed through any of the following means –

Ed-tech

The combination of education and technology is revolutionary. It has allowed students to study right from the comfort of their homes. You can also enrol yourself on a finance program and learn about the basics through ed-tech.

Online courses

There are specifically designed online finance courses that help you gain an insight into the world of finance. You can study these courses at your own pace as they are flexible. So, enrol for these courses and start your education. 

Investment apps and newsletters

Modern-day investment apps also contain informative articles and blogs that help you gain useful knowledge about finances. Download these apps on your Smartphone and start learning. Also, subscribe to finance newsletters to get a monthly update on the latest happenings in the financial world. Subscribe to our monthly newsletter She.ksha.

Key points:

While you know the modes, the financial world is huge. When you start your journey, you need to get the basics right. So, here are some important financial key points that you should remember when you start your financial journey –

Asset Allocation

Asset Allocation means allocating your savings to different types of investment instruments. Also called portfolio diversification, asset allocation helps you mitigate the investment risks associated with a single type of investment. Moreover, as you diversify your portfolio, you can enhance its return potential too. Click here to watch the video to understand Asset Allocation.

Debt consolidation

Debt consolidation means having a single, consolidated debt rather than multiple small ones. Debt consolidation helps you manage your debt easily as you have only one repayment to think of. So, if you have multiple debts, consolidate them into one for easier servicing.

Risk profile

Every investor is different, as each has a different risk profile. Before you start investing, you should know your risk profile. Find out what type of risk-taker you are. Can you tolerate high risks associated with equity investments, or do you prefer fixed returns? Or do you have a moderate risk profile?

Profiling your risk tolerance is essential so that you can pick investments that match your appetite. 

Risk of cyber crimes

With everything going digital, there is an increased risk of cybercrimes that you should be mindful of. So, educate yourself on the possible ways to avoid falling victim to cybercrime. Find out how to use the internet responsibly and avoid falling into the trap of fraudsters.

Budgeting is an important aspect of personal finance.

It is like the first step in saving for your financial goals. As such, it is imperative that you know the basics of budgeting. Here are some nuggets of wisdom for starters –

• Assess your income from all sources

• List down all your expenses.

• Sort your expenses into necessities and non-essentials

• Try and limit the non-essential expenses to save more

Take these basic budgeting steps, and you will see a difference in your disposable income. This would help you save more for your financial goals as well. 

Insurance and investment are the other two basic aspects of a financial portfolio.

You need both – one for financial security and the other for wealth creation. So, invest in a health insurance policy and a term life insurance plan. Buy these plans at a younger age to get security against financial emergencies. This would also secure your financial planning in case of any contingency so that your goals do not get hampered.

When it comes to investments, the right place to start would be a mutual fund SIP. SIPs are regular investment plans that help you save small and affordable amounts every month. Start a SIP from an early date so that you can amass the desired corpus for your goals with disciplined investments and the power of compounding returns. 

The bottom line

A popular saying goes – Well begun is half done.

When you are young, you have time on your side, and if you begin your financial journey from a young age, you will have a good handle on your finances at a later age. This would help you plan effectively for your financial goals and help you achieve financial independence. Remember, there’s no time like the present. So, start your financial journey today!