Young, Glamorous, Riskless and Broke!
I interact with a lot of youngsters. I mean from age 21 (fresh graduates), 23 (fresh MBAs) up to the age of 30- and a few who are older too. I would have said Young, Fabulous and Broke – but Susie Orman uses it regularly on her show!
I do not think there is a pattern to their financial behaviour – each person is so different that the ‘convenient’ clubbing that financial planners, bloggers, TV anchors do (or rather have to do!) sounds illogical. However there is no choice – programs / blogs/ articles have to address groups and cannot really be custom made for each person.
Some of the stand out characteristics of kids born in the 1980s (not including even 1979 – clearly 80s ONLY) are nice to see:
a. They are confident: clearly kids born in a free economy (no socialism baggage, except hand me downs from parents – largely born in the 50s, 60s).
b. Job is my birthright: ‘If I lose my job in the 4th floor of a building, I may just have to go to the 3rd’ – is what one of those kids told me.
c. Brand loyalty / craze: obviously as peer pressure there is tremendous willingness to pay a huge premium for branded goods.
d. No brand intimidation: Having said that they are brand loyal, many of them will happily chuck a job in TCS for a job in Mukesh Trading and Brokerage if they think they will be better off there. No worry of chucking well paying big brand jobs. This attitude they seem to have applied to their college choice too – they need a BE or a MBA – immaterial as to where they have got it from. Very few kids born even in the 1970s have this attitude.
e. Riskless..well er..so we think: Any financial planner would want kids of this age group to have upwards of 90% in equities – but I see them REBALANCING even now into ‘bank fixed deposits’ or ‘psu run elss schemes’ – as a risk reduction strategy (will do a separate post too!).
f. They are young, earn well (even inflation adjusted, salaries have gone up over the past 30 years for sure), lead a glamorous life (lets do a Barista or a CCD is the norm), have an excessively debt oriented portfolio, and most importantly live on a day to day basis.
g. One thing common surely is ALL of them are broke! Whether it is because they are paying the EMI on a car gifted to ‘Dad’ on his 50th birthday, or co-paying a housing loan, or buying a top end motorcycle, ‘doing a Barista regularly’ – the reasons could be many, but yes, most of them – Boy or Girl – cannot afford to remain unemployed EXCEPT with help from the ATM at home named POP or MOM.
naresh
Hi,
I am also part the above group, recently married and have 3 month old kid.
i have not purchased a house yet, but i have car emi (taken the least priced car for my height 5.10 waganor, could have purchase from cash but that will be from emergency funds which freaks me out if i dont have any emergency) bcz of fimily, car is now mandatory pregnant, kid…
it seems many of my friends recently purchased houses (avg age 28 to 30) avg price 30Lacs with loan amount averaging to 20 to 25 lacs.
do you think what is the good age to purchase a house, like me, no cash from parents, have to earn and purchase….
l1nu5r
I think it’s not about age but about how much cash one have on hand and amount of EMI to pay safely
akshat
Within a year a couple of years into working, I realised that the ULIP policy and mutual fund NFO that my father’s friendly agents had sold me were big mistakes and started small SIPs. Am still continuing with increasing amounts, although things are quite down right now :(. I find it quite amazing that in my peer group, leave alone mutual funds, people dont even open FDs! All this talk of finance is confusing, so I’ll do what my father tells me – buy LIC or house or whatever else. How do you think this will turn out in the future when many of these people near retirement and might have possibly nothing to fall back on ?
Ajay
I am born in the same era subra is talking about. let me try my own honest analysis for all points mentioned.
(a) They are confident: Partially true, While I am confident at the same time I can think of bad situation’s during recession.
b. Job is my birthright: Partially true, If a economic recession happens loosing a JOB would mean lot of stress.
c. Brand loyalty / craze: Partially true. I would not simply copy brands my peers are using. Depends on VFM thing.
d. No brand intimidation: Not true. Will think a lot about choose a new company. I would not compromise on standards of Company for sake of some easy money. I am into current company for more than 3.5 years and still not thinking about changing it.
e. Riskless..well er.. Partially true. 90% of my investment are in mutual funds, Rest in PPF. NO FD, but agree there is lot of money lying in my savings account. Need to balance that.
f. They are young, earn well . Me and my wife are both working and we save more than half the amount we earn.
g. One thing common surely is ALL of them are broke! .
Not true, though married, I have zero debt as of now. No car, NO house. May be in next month I will purchase a less expensive car which I can fund from my savings.
subra
Ajay,
normally borrowings happen only when there is a car or a house. Marriage expenses of Rs. 15 lakhs was paid for by an ATM called ‘POP’.
Now take the exp on education and marriage and pay it off to your dad or dad in law (mentally) suddenly you will find there is NO CASH.
When I said broke, I am talking of kids who did not dip into POP OR MOM for ANY EXPENSE – they, BY DEFINITION, have to be broke.
anon
I envy the time they have.
What an opportunity!
subra
Anon,
do not envy. It is easy to go from rags to riches. Those who are 40 now and have a decent retirement corpus seem to be in the best position. Those in their 20s will find life very tough when they are in their 40s. They would have got it easy till then – and then life will get tough. Remember India is a YOUNG country, so there will be tremendous pressure from people willing to accept lower salary jobs. Unless you are brilliant, adaptable and well qualified NOW in your 20s, life is not going to be easy 20 years from now.
I do not have to worry about the accuracy of what I have said. I hope to be dead by then 🙂
DM
Good article Subra. I would agree with Ajay its partially true for people born in 80s . We have seen transition from bad to good times in life hence are quite aware how bad circumstances could be and we also plan for the same.
However i am quite surprised at the way you spoke about your own death .How can you be so cool about it when i ,being 30, am not ?
Ajay
Subra
My dad did fund my education after upto graduation, it was mostly Govt. schools and college and fee was very less.
I did post Gradutaion on scholarship from a prestigious Govt College which funded my 100% course and still left me some money before my first JOB.
Having said that I do acknowledge we get monetary help from parents from time to time. As long as we are not eating their retirement fund it perfectly find.
Coming to marriage I wanted a simple marriage for myself but its our parents who wanted extravagant marriage.
After all they have social obligation to do so.
So made a deal. I would pay half the marriage expenses and , the rest was paid by dad.
I have made contributions to my sisters marriage and our house according to my capability.
Recieved no dowry, have a qualified spouse so to start a new from scratch.
I do however agree that most of peers of my generation would have different story to tell.
subra
Ajay I am not talking of you in particular. I mean generally Indian marriages are grand because parents like to show off. Recently a friend got his son married off for under Rs. 3 lakhs – because his son refused to attend a more ‘show off’ wedding.
I paid for my wedding reception – and invited my friends only for the reception.
Generally marriage expenses are paid for by her parents, his parents or Icici bank! EMI for a marriage loan – every month you are reminded ‘dekh tu ne kya kiya’ LOL
MK
Ajay, your talking about ‘you’, subraji is addressing ‘generally’.
Ajay
MK
Yes got that, Thanks for clarifying.
anon
Subrabhai– did not think of their advantage in that context.
Sobering.
Indian Thoughts
I am born in 80’s as well. Let me try my own honest analysis for all points mentioned as done by Ajay above
(a) They are confident: True, I am confident that I can survive even a recession, because of qualification + EF I saved on my own.
b. Job is my birthright: Not true, after seeing 3-4 recessions in such a small span can’t even think of thus in my dream. Thats why I saved 1 year of my expenses as EF.
c. Brand loyalty / craze: Sir not true. But yes I prefer quality over quantity anytime but never think in terms of brand.
d. No brand intimidation: Not true.
e. Riskless..well er.. I try to maintain a balance portfolio since starting but yes have skipped balancing it in few years.
f. They are young, earn well . Yes we both earn pretty decent and now I have a 3 month old kid so no more in DINK category.
g. One thing common surely is ALL of them are broke! .
Not true, so not true. I have mortgage yes. Car was bought cash down. have 1 year of emergency fund saved and have decent savings. If i sell all my investments (including retirement portfolio), can pay off my mortgage. But yes I live a pretty lavish lifestyle. I agree that I can save more but then i am worried will I be able to enjoy those things later on. So I try to balance today with tomorrow.
And no, I had a good punjabi marriage, but I contributed and my parents didn’t go broke. I don’t take money from my parents or in laws. And I try to help them financially occasionally.
prabe
Subra
Looks like many people are taking into their heart and talking about them.
I am from 80s 1986 .
I have been trying to change from last year to improve financial life and doing things right.
I already am working for 5+ years now and have a meager saving.I do agree many of my friends doesn’t even know financial planning and go for LIC policy.I have few friends who have bought lic and started looking at document after asking them what it is ULIP or Emdowment.
Suresh
Sometimes its good to have a non functional state – people learn to plan and survive for themselves.
Personally am hopeful that the current gen (30s) will do much better than the previous gen (say 50s now) as they tend to be more confident and more importantly far more realistic.
I am also hoping a very innate sense of conservatism comes to their help in a crisis.
Sadly because they have not seen much of a survival economy, risk appetite tends to be unthought, till the first ‘crisis’ – though they bounce back far better.
geodesic
subraji,
These youngsters of our great India seems to live life to the full loaded on debt.
I have already bought shares of companies based on the consumption pattern of these young morons who haven’t seen bad times. My only question to you is how do I capitalize on these young smart kids going for LIC policies? Will buying LIC Hsing Finance suffice to play them buying LIC insurance policies without even thinking deeply what they are doing? It is a great time when these youngsters are given easy money and they can’t even save a rupee. Let more of these morons be born!!
subra
first of all Suresh I am not sure about the guys in the 30s, they are very very diff from the kids in their 20s. Will they bounce back? Not sure. Take life insurance salaries – they thought it was their RIGHT to double their salary and total take home every 2-3 years. Now it is not likely to happen. Bank employees are selling far more insurance than agents. Very few of the kids were ready for this.
Geo – frankly I do not think they are morons. They come from a secure atmosphere. For many people of my gen they were the first people who bought ‘luxury’ items like a vacation, a visit to a 5* hotel, a car..etc However these 1980s kids have had a foreign vac, a car, tv, etc. as a part of their schooling. So they think they deserve it. They will have problems about 20 years later when they are middle aged, battling with poor health and pressure from 23 year olds willing to work on a lower sal…
you will have to wait for the LIC public issue. What does Lic hsg have to do? the question baffles me.
‘youngsters given easy money’ is the angst of a frustrated man/woman?
geodesic
subraji you replied me at 4.40 in the morning? what time do you wake? Or maybe today was you long run day i guess. Even i used o take part in half marathons and Sundays used to be my long run days.