I am dealing with a lot of millennials in my talks these days and I realize that they are finding it difficult. For most of them the conversation starts with “do a sip….” and they say the following:

• you do not know how expensive it is to live!
• I have other expenses too Subra Sir
• I have no idea how X saves 15k a month

And suddenly one day he/she will call and say “I have a lumpsum of Rs 70,000 where can I invest” or even worse “I bought a life insurance policy from….Bank” or “See I told you…my husband made me make a down payment for the 3rd flat which we do not need” or something like that.

I keep telling ALL investors, if you do not do GOAL SETTING, investments will fail. Investing is about setting a good process and making sure that you stick to the process. It is the ‘WHY’ of investing which is so very important.

Now imagine a couple earning about Rs. 150,000 a month. Let us say they prioritize their EXPENSES as follows:

• Spending time together
• travelling in reasonable comfort
• eating healthy food
• wearing decent clothes BUT NOT SPLURGING on brands
• planning for a kid
• travel and see India before venturing abroad

Now clearly ALL your expenses should be revolving around these 5 ‘why’ of spending. This means there will a dramatic cutting down of junk food, eating out, buying that 9th tee-shirt, or 13th pair of shoes, or…..

THAT WILL PUT SOME MONEY IN YOUR HANDS without feeling deprived. ONLY after you do this exercise can you now think of investing. Again you need the ‘why’ of investing. So let us say THE BROAD ‘why’ of investing is like this

• live in reasonable comfort in the suburbs of Mumbai
• buy a 3bhk by selling off this current 2bhk in about 5 years time
• upgrading the car every 8 years / buying a second hand car and using it for 5 years
• retire in comfort
• be ready with a decent corpus for children’s education (part pay, not full)

Once you have these broad ‘why’ of investing, you can sit and work out your GOALS – specifically choosing products suitable for each goal. This is not so strictly necessary for goals falling in the same ‘time bucket’. For example if you are a 30 year old girl with a 2 year old kid, clearly your retirement is going to be a little after your daughter’s wedding (eeks, I hate this  but most Indians love this goal). So if your daughter’s wedding is 25 years away and your retirement is about 30 years away, you can put into a BUCKET of 3-4 funds…and hope to withdraw first for your daughter’s wedding..and then for your retirement. THE PRODUCT choosing does not matter as MUCH as the process matters.

You must stick to these ‘why’ of spending – so that you go to a mall and do not feel deprived that you are not buying something. YOU KNOW it does not fit into your ‘why’.

Then you choose buckets of 4-5 funds from 2-3 fund houses and create “upgrading a house bucket”, or “upgrading a car” bucket (aka goals).

Then you don’t ask stupid questions like “In an election year should I stop the sip”. YOU know why you are saving. You know why you are investing. YOU set the goals.

Try this. Then walk into a mall with your husband, and see how both of you do not succumb to the unnecessary shit that you have/had an urge to buy.