Minister your finances better! How smart financing purchase decisions can help you be a uber-saver

Updated: September 23, 2019 3:48:45 PM

From booking movie tickets to buying smartphones to making big-ticket expenses such as buying a car, the youth believes in taking smart and calculated moves for saving the maximum amount of money.

Minister your finances better! How smart financing purchase decisions can help you be a uber-saverFrom taking a personal loan to meet their immediate needs to taking a home loan with the aim of building an asset in the long run, millennials are not shying away from spending in the right manner.

25-year-old Rohit has been contemplating buying a car for quite some time now. However, a fat pay package and reasonably good job security, notwithstanding, he’s still postponing the decision to own a car.

Welcome to the world of millennials, the growth-drivers of the contemporary economy. From booking movie tickets to buying smartphones to making big-ticket expenses such as buying a car, the youth believes in taking smart and calculated moves for saving the maximum amount of money and getting the best of everything.

More than any other consumption parameter to gauge the economy’s strength, rising car sales have always been perceived as a reflection of a country’s economic growth. Rohit is just one of the many who, in spite of easy financing options available in the market, are just not ready to step on the accelerator. A study by Zipcar, a car-sharing platform, has pointed out that millennials prefer access to cars, over ownership of cars. Incidentally, Finance Minister Nirmala Sitharaman also recently remarked that millennials are relying more on cab aggregators rather than owning their own vehicles.

While it may be debated if these smart, scrupulous millennials indeed are killing the auto industry, one thing is clear – the millennials do think differently when it comes to making a purchase decision. Value for money is the mantra they live by, and a good deal lights up their eyes! They have mastered the art of applying the same rigour, be it while planning their next Ibiza vacation or choosing where to invest their money!

Changing consumer behaviour

From taking a personal loan to meet their immediate needs to taking a home loan with the aim of building an asset in the long run, millennials are not shying away from exploring the right mix of financing solutions that are available in the market And, when it comes to investing, many of them are also going against the preferences of the older generations. According to a recent study by Computer Age Management Services (Cams), a large chunk of new investors in Mutual Funds in India are millennials.

This behaviour is reflected across their money choices. Hence, even while choosing to invest in a traditional instrument such as gold, they prefer to hold Digital Gold and yet reap the benefits of the yellow metal. Their choice, which is fast manifesting itself as a pattern, not only cuts down hassles and risks of storing physical gold but also provides the benefits of immediate and safe redemption. That’s not all. To lead a more carefree life, more people are buying protection products such as health and life insurance and even insurance covers for laptop, eyewear, baggage, travel and holidays, amongst others.

Personal loan for lifestyle needs

Millennials love to live life king-size, and do not want to compromise on the quality of life. Their spending patterns and buying behaviour are not just unique but also influenced by the digital world. They go online to shop and don’t hesitate to take personal loans to fill their shopping carts. However, it is important to keep an eye on the interest rate while taking a personal loan. Go for personal loans with the right interest rate and affordable EMIs that can help you save for your future goals we well. For example, a monthly difference of Rs 250 in your EMI over 5 years or 7 years results in a savings (at an assumed compound growth rate of 10 per cent per annum) of approximately Rs 20,000 and Rs 30,000 respectively. Now, if you invest the lump sum of Rs 20,000 and Rs 30,000 for 30 years with returns growing at 12% compounded yearly, the corpus becomes almost Rs 6 lakh and Rs 9 lakh respectively!

Keeping guard against medical costs

The importance of having an adequate health insurance cover is also not lost on the younger generations as they see their parents having no or little health coverage often struggle to guard against rising medical costs. Getting a health insurance policy at an early age keeps the premium low as health risks are less in lesser in young age. Illustratively, for someone of age 25 buying a health cover later at age 36 pushes the annual premium higher by Rs 1,000 for a sum insured of Rs 5 lakh. Had it been bought at age 25, the additional annual premium of Rs 1,000 could have accumulated to nearly Rs 3 lakh in 30 years, at an assumed growth rate of 12 per cent.

Right purchase and financing decisions

Making the right purchasing decision goes a long way in saving a sizeable amount over the long term. Financing also plays an important role in one’s purchase decisions. The biggest advantage of getting your dream products financed is instant access to credit; it helps you purchase more within your budget, immediately. From groceries to gadgets to big-ticket purchases, nowadays there are options to meet your’s and your family’s needs. While credit cards help you purchase goods on credit, there are EMI options and even No-Cost EMI options that give a much more fulfilling experience to consumers.

Financing helps us fulfil the adage of carpe diem – to seize the day today than wait for tomorrow. However, just like making the right purchase decision, you need to make the right financing decision as well. Remember, a small difference in EMI can add up to a big amount in the long run.

For example, a monthly difference of Rs 500 in your EMI over 5 years or 7 years results in a savings ( at an assumed compound growth rate of 10 per cent per annum) of approximately Rs 39,000 and Rs 61,000 respectively.

Making the right purchase move is in itself the first step towards savings. And, when your purchases span across different consumer goods such as high-definition TV, Smartphones, Tablets, Laptops, refrigerators or smartwatches, keeping a tab on your monthly expenses becomes easy when you know about your monthly outgo. In such situations a EMI card comes in handy. An EMI Card makes your purchases get converted into EMI’s that are affordable in the long run.

How savings help create a sizeable corpus

Financing and purchase costs can help millennia save not only money but also help fulfil most of their needs within the budget. Regardless of whether you are a salaried professional or you are running your own business, inculcating a habit to make the right move when it comes to purchasing can help you save for your future needs. Ensure that your every purchase decision is right in terms of cost so that cumulatively it helps you save a larger amount.

Even without compromising on your needs, you make the two ends meet and finally save a fortune! Here is how:

Consider you happen to save approximately Rs 7,000 each month, just by making the right financing decisions. This amount when invested at an assumed growth rate of 12 per cent over 20, 25 years has the potential to generate Rs 69 lakh and Rs 1.31 crore respectively, a corpus accumulated merely through smart savings!

Bajaj Finserv EMI Store: The Next-Generation Lifestyle Store

One place to get the best of the financial and lifestyle products at an unmatched buying experience is on Bajaj Finserv MARKETS. From lending to insurance, to investments and payments we have solutions for all your financial needs. Moreover, the Bajaj Finserv EMI Store has more than 43,000 sellers across India offering more than 1 million products at No Cost EMI. Minimal documentation, pre-approved offers and a seamless buying experience Bajaj Finserv EMI Store offers you value like no one does! Bajaj Finserv EMI Store has more than 43,000 sellers across India offering more than 1 million products on No Cost EMI.

It is clear, thus, that purchase decisions need to be carefully evaluated as any wrong buying decision could hurt you financially. Whether it’s a consumer or financial product, purchasing it at the right time itself saves a lot. The better you plan your expenses, the more will be your savings. And, when the savings get routed towards the right avenues, you end up with a huge corpus after a few years down the line. No matter how small your savings are, with smart planning you can build a sizeable corpus in the long run.

So, what are you waiting for?

(This article is sponsored by Bajaj Finserv MARKETS)

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