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If you start saving from 25 years of age and save up to the age of 55, you can create about Rs 3.5 crore in these 30 years with Rs 10,000 monthly SIP. If you do a 10% step-up every year, you can create Rs…Read More
(From left to right): Dhirendra Kumar, founder of Value Research; Rajul Kothari, partner at Capital League; and Prableen Bajpai, founder of FinFix Research & Analytics.
Financial discipline is a life skill which is never told and schools should teach kids about affordability and train them about risks, according to financial experts. They also said added that parents should also teach their kids about financial concepts like budgeting and investing by involving them in real-life finances.
The experts said the earlier you start saving, the more money you end up creating with less effort.
At the News18 Rising Bharat Summit, Dhirendra Kumar, founder of Value Research, said, “Today, instant gratification is the new default. Earlier, the waiting time to get a scooter was eight years, that to get a MTNL telephone connection was nine years. Today, if you wish something, you get it.”
“Secondly, lifestyle inflation is considered normal. If you are growing in life, you are spending your way to demonstrate growth. Otherwise, you are not growing enough, you are not prospering,” he added.
Thirdly, fear of missing out is real today. A lot of people are very upset, very disappointed with themselves if they think they have really not achieved anything. They feel left out, he added.
“Financial discipline is a life skill which is never told… Schools teach you algebra, they don’t tech you affordability. Today, the youth is untrained in risks,” he added.
Rajul Kothari, partner at Capital League said, “We grew up in a situation of scarcity and now our kids are in a situation of abundance. So, the very thought that we have to think twice before buying something or before spending on something, is missing today. Society will have to deal with it as a collective force.”
She added that it should be started with parents because kids spend a lot of time with them and learn by example.
“I have two kids, 20 and 27 years old. I opened their bank account at a very young age. I teach them how to deposit, how to invest, how to make a portfolio and show them how their money is growing,” Kothari added.
Likewise, we can teach them budgeting, she said. “It should be fun, not boring.”
Prableen Bajpai, founder of FinFix Research & Analytics, “I think one of the most scary trends in the society today is growing comfort with credit and loans. Most of the pictures that we see of a foreign trip is out of a personal loan… I spoke to someone who was trying to fix his finances. He took personal loan for marriage.”
In event like marriage where your budget can range from a few thousands to crores, you have to put a capping, she added. “You need to limit yourself. You need to have a budget. It is not that you should not go to a foreign trip but you should plan it in advance.”
‘A Rs 10,000 Monthly SIP Can Save You Rs 5 Crore’
Sharing a saving calculation, Pajpai said if you start saving from 25 years of age and save up to the age of 55, you can create about Rs 3.5 crore in these 30 years with Rs 10,000 monthly SIP. If you do a 10% step-up every year, you can create Rs 8.7 crore.
Let’s say, if someone starts SIP at the age of 45 years till 55 years. With Rs 10,000 monthly SIP, he or she will end up creating only Rs 23 lakh in these 10 years. Even a 50% step-up will give a total of Rs 1.8 crore. Now, in order to reach the Rs 3.5 crore goal in 10 years, that person will have to invest about 16 times the current SIP, which is Rs 1.60 lakh per month.
