India’s youth borrowing big to get married

As much as 20% of all loans taken by young Indians in 2018-19 were to fund their own wedding, found a recent survey conducted by online lending platform IndiaLends. Chennai leads the trend with 24% of its youth borrowing money to meet wedding expenses, followed by Mumbai and Delhi. The platform interviewed 5,200 respondents between 20 and 30 years of age across six metro cities in the country.

After wedding, travel is the next big reason why millennials borrow, shows the report with Hyderabad leading the way. As much as 22% of the youth from Hyderabad borrowed to fund their travel expenses.

Delhi leads the way when it comes to overall lifestyle borrowing. Young Indians from the city led the tally at 27% in the entire lifestyle category.

However, it may not be wise to borrow for lifestyle expenses. According to Basavaraj Tonagatti, Sebi-registered investment adviser and certified financial planner,once you start earning, you must jot down some basic goals for which you want to save. If marriage is one such goal, you must save for it separately.

Even then, it's better not to go overboard. “Keeping in mind the current cost of living, which is high, it’s better to not spend too much on weddings and save the same money for more important goals such as retirement,” said Tonagatti.

In another interesting observation, 11% of the country’s young population borrowed to fund their own business and maximum applications (27%) for the same came from Bengaluru, the hub of startups.

Unlike the previous generation, which was prudent in spending, young Indians today do not believe in just making ends meet. They are spending the maximum on things they are keen about, such as higher studies, funding their own business, paying for their own wedding and travel expenses,” said Gaurav Chopra, founder and chief executive officer, IndiaLends.

While it’s true that millennials are spending on experiences rather than conventional goals, it is important to include these spends as a part of your financial plan. Tonagatti said he’s seen many families who’ve made the mistake of not planning for their holidays and ended up relying on credit cards and personal loans which eventually landed them in a pool of debt. “Delayed gratification is better than borrowing which in turn makes you compromise on your other important goals. I advise to start saving in a recurring deposit a year before you want to take a holiday," added Tonagatti.

Overall, more and more people seem to be taking loans. IndiaLends found that loan applications across categories in all six metros rose to 15% in 2018-19 from 9% in 2017-18 and 7% in 2017-16.