Meet Harish Amera who touches a very high five figure gross salary because of his networking job at a Fortune 500 tech company. The millennial lives life completely by his own terms. Harish simply loves what he does, absolutely enjoys traveling and a great time with friends. His weekends are packed with fun activities, partying and shopping. Harish lives alone in a high-rise elite single bedroom apartment in Bangalore.
He is happy that all his hard work studying and securing grades in his school and college has finally paid off in the form of this lucrative tech job he managed to bag. Harish decided to cool off and enjoy life.
Harish also gets his family gifts, whenever he visits his native town of Coorg. Although his family did not need his money, his parents very happy for Harish and they took lot of pride in him. Harish also helped his needy friends sometimes. He shared his flat and groceries, and sometimes with a loan, which most of the time was never returned to him.
He also used his credit card to buy that irresistible designer wear shirt or trouser or for that weekend dinner with a girlfriend at the end of the month. He was gamer too, and fancied all the latest games as downloads and memberships. As months went by, Harish eagerly waited for his next salary. Sometimes right from the 20th of the month. He always found himself broke and kept thinking that he wasn’t earning enough.
Here’s what Harish’s monthly Expenditure looks like:
Food, drinks and Groceries: 7500/-
Internet and Phone bill: 2000/-
Travel & Commutation: 3500/-
Car Loan EMI: 9700/-
Shopping, Eat outs, Partying: 23600/-
Home Maintenance 3500/-
Now, that is a whopping 76300/- every month. It is no big rocket science that Harish was overspending. No doubt he earned his lifestyle, but he never failed to live every penny of it. Sometimes, in the most unwarranted ways.
At 24, Harish definitely has a lot of time on his hands. If there is clearly one thing that he has to do right now, it would be to cut down on his spending. What are the money management aspects Harish overlooks?
Time flies: Sooner or later it would expected of Harish to settle down with a family and that would possibly happen any time in the three years. Assuming he saved close to 20000/- a month which is again definitely a big step for the lifestyle is his used to, Harish would end up saving 7.2 lacs. This is the sum Harish will have at his disposal for his wedding, honeymoon trip, surprise his wife or fiancée with gifts and let’s not forget the margin money for his home. Now the screws tighten unless he would take financial help from his parents or in-laws
Security: Tech jobs are forever on the rise, but high paying jobs demand niche skills and the techie is on an endless update of knowledge and skills. The techie who is passionate about growing spends considerable time and money on updating his knowledge. Projects open and close and platforms become outdated and that becomes a challenge for the techie who isn’t growing up on the corporate ladder. So what does this have to do with Harish’s income? Harish is on a high-risk high pay terrain. He should definitely keep himself prepared for unemployment periods. And that would be a minimum of 3 – 6 months, given his income. It’s critical he shores up an emergency fund of INR 3-5 lacs.
Investment, Entrepreneurship and Retirement Planning: Investing early is like a gold mine that you are digging. The benefits are multiple and boundless. A millennial with a high income, who invests early attains financial independence and security much earlier. The time and money will now work to fuel their passions or empower them to get into entrepreneurship. Acquisition of fixed assets and early retirement too will now become a great possibility. Moreover, high pressure and performance jobs get the better out of an individual early on, leaving them thinking about alternate careers 6-7 years down the line. Salary income may not grow according to an individual’s expectations.
If saving and investing is not considered by the millennial early on; age, inflation, needs and aspirations can leave them constantly broke.