Home >Money >Personal Finance >Dear millennials, time to manage your own money

Imagine your organisation has offered you a project that you have been dreaming about. Would you ask your parents to do the project for you? In another situation, say you want to go on a holiday with your friends. Would you ask your parents to decide on the location, date and the things that you would want to do on the trip? Or say you want to go out for dinner with your friend. Would you ask your parents to select the food that your friend and you would eat?

The answer to all these questions, in all likelihood, will be no. But when it comes to finances, most individuals get cold feet and assign the job to their parents.

In the past, I have met multiple sports personalities, Bollywood celebrities, salaried individuals and even children of the richest 1% in the country who completely rely on their parents for money management and financial planning.

Money is one of the most sensitive topics to discuss with family members. I am not against the concept of parents managing your money. If your parents are extremely financial savvy and understand the nuances of money management, you should seek help from them.

But at the same time, it is important for you to be involved in the decision making process. If not earlier, at least from the time you start earning, money forms a key part of your life.

Your expenses, savings and investments together have an impact on your overall lifestyle. Just like you know which cuisine to try and which music to listen to, you should also know which fund to invest in and how to build your own investment portfolio.

To begin with, start taking interest in money management. The way you know that you have to go to the gym regularly and eat well to build your muscles, you need to similarly give time for your finances. You can start small, by collecting information about finances.

Next, start buying insurance for protection. You need to have adequate health insurance and in case you have dependents, a term cover.

Once you have protection, you need to build an emergency fund to take care of unforeseen circumstance such as job loss or any medical needs.

As a thumb rule, six-month expenses as emergency fund is good to begin with. Once you have put in place your emergency fund, you can start building your kitty to fulfil your financial goals such as retirement, child’s education and travel.

For this, you can diversify your portfolio by investing in different instruments such as equity through mutual funds, fixed income instruments such as Public Provident Fund (PPF), bonds and fixed deposits.

You can also diversify a portion in physical asset, if you like to have it in your portfolio. Once you have this structure in place, you will be more confident about your money.

However, a lot of people only focus on building the money or consider their job done once they get the income and leave the money management work to their parents.

Parents who are not financially savvy may end up taking not-so-wise decision, making the income earned not grow for you.

Even if they know how to manage the money, it is important that you too have a grip on money management. It is not cool to be daddy’s little girls and boys when it comes to money management.

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