GenZ and finance: The importance of investing your money cannot be overstated, says Vedanshi Gupta

The significance of financial independence is of utmost importance within the younger generation. It empowers individuals with the ability to make their own choices, pursue their passions, and shape their future on their own terms. By attaining financial independence early in life, young people can break free from financial constraints, reduce reliance on others, and build a strong foundation for long-term stability.

Vedanshi Gupta tells MintGenie in an interview about how investing in areas like the stock market without adequate knowledge or solely based on recommendations from friends is a common mistake many of us have made, but it is something that must be avoided at all costs.

She graduated in business management from Narsee Monjee College of Commerce and Economics, Mumbai in 2021. Apart from that, she has interned in finance and jewellery firms, and is currently working at a consulting firm as an internal auditor.

Edited Excerpts:

What does money mean to you? Is it the most important factor when it comes to your life decisions like what to study, career and so forth?

In a world with a great many corporations and highly varied courses, consisting of people having different views, tastes, and ambitions, money cannot be the sole factor when making significant life decisions. Considering money as the most important factor in deciding my career trajectory (without considering interests, passion, or aptitude) would be the recipe for an unsatisfactory life. However, the importance of money cannot be understated.

Even though it might not be particularly obvious, everything we have in our lives is the result of choices. For example, to achieve financial independence and genuine freedom, one needs a basic amount of money not only to survive but also to evolve, learn, and take care of loved ones when needed. For general well-being and a sense of purpose, finding a balance between financial security and personal fulfillment is essential. Hence, money, for me, is not the end but a means to a happy and fulfilling life.

What do you spend your money on every month at the moment? Can you give a breakup in percentage terms?

My mother has always taught me to track my expenses, and it’s one thing that has stuck with me. It helps me with estimating future expenses as well as understanding the correct picture to address any unwanted deviations.

Besides basic necessities, I invest in my health, the market, leisure, and any foreseeable significant expenditures. Thirty percent of my expenditure is dedicated to essential costs such as rent, food, electricity, etc. I also prioritize saving and investing. Twenty percent of my income goes towards various securities and building an emergency fund.

Recognizing that maintaining good health is crucial for long-term prosperity, I allocate 15% of my expenditure to the gym, swimming, other sports, and appointments. I reserve another 15% of my expenditure for leisure activities, purchases, and important socializing with friends and family. This is essential to maintain a healthy work-life balance.

The remainder of my expenditure is allocated to either traveling or events and goals that I anticipate requiring funds in the future.

What are the things you want to spend money on?

I like to travel and go out with friends. Traveling and meeting new people bring a new set of experiences, and it is something that I enjoy a lot. I sometimes like to cook and bake, so I often spend on fancy ingredients and equipment. However, I feel that the most important thing for me is my physical and mental well-being, hence I want to spend my money on the same.

I also want to spend money on my brother when he runs out of his allowance. I believe that life cannot be lived individualistically, and it should be okay to spend money on close friends and family.

Lastly, I want to always spend money on learning. It is a lifelong process, and it is something that is always helping and bettering us and the people around us. Aiming for interdisciplinary improvement is equally important as learning for professional advancement.

Do you save money? If yes, how frequently and what do you do with this money?

Yes, I save money. I believe every responsible professional should. I had previously invested some money in the stock market, which I must admit was done without proper knowledge. My management of money is constantly evolving as I strive to become more financially literate.

There are some key factors to keep in mind when assessing the amount of money that should be saved, as well as its allocation based on risk tolerance, goals, etc. Currently, I begin by having insurance with my saved money. It is essential to have both life and health insurance. Following that, I allocate funds to my emergency fund. It is also crucial to have an emergency fund with enough money to cover expenses for 6 to 12 months.

Once the emergency fund is established, I plan to further invest in the stock market. I have concluded that I will invest in mutual funds for a while until I have a clearer understanding of my knowledge, as this allows individuals with more expertise to make financial decisions on my behalf.

What does having a job mean to you? What are the top two factors you will want to think about when deciding a company to work for?

A job is not merely a path to financial stability; it is a pavement for freedom, discipline, confidence, and pride. It acts as a ladder for all future roles I will encounter and provides opportunities for learning, growth, and self-improvement. Coming from a traditional background, it is also essential in helping me make independent decisions. My role and job define me as much as I have the prerogative to define them; hence, I am very cautious when selecting them:

A company is shaped by its people. Particularly at the level where I am, I believe that my aim is to learn and become a better working professional. Therefore, the company’s culture, the environment it cultivates, my professional growth, learning opportunities, managerial leadership, and alignment with future career goals are all crucial factors for me when deciding on a company.

Furthermore, I believe that being underpaid for one's work or not receiving due recognition and opportunities after performing well can have a negative impact on one's performance and growth. Fair compensation is a right that everyone deserves; thus, I also assess the compensation and benefits the company offers.

What do you think about investing your money? If you have a certain amount of money set aside, will you want to invest it in the stock market, mutual funds, or do you just keep it in your bank savings account?

The importance of investing your money cannot be overstated. If I am not investing my money, I am not only diminishing the future value of my savings but also reducing the overall amount of money I will have at any future date. Investing in areas like the stock market without adequate knowledge or solely based on recommendations from friends is a common mistake many of us have made, but it is something that must be avoided at all costs.

The stock market, mutual funds, and bank savings accounts all hold their own significance. I prioritize building an emergency fund before venturing into mutual funds or the stock market. Having an emergency fund is essential to prepare for unforeseen circumstances and avoid succumbing to financial pressure. 

As mentioned earlier, I have invested money in the stock market. However, currently, I am more inclined towards investing in mutual funds. Mutual funds are managed by experts with extensive knowledge of the market. They offer an excellent starting point for anyone beginning their financial investment journey.

In the future, as I acquire more knowledge, I also intend to explore alternative investment fields such as derivatives and cryptocurrencies.

Do you think you have an understanding on how to save and invest? If yes, how did you learn? If not, are you trying to learn?

I have studied about the stock market and other financial instruments markets in school and college. Therefore, I like to believe that I have some understanding of how to save and invest. Nevertheless, I still recognize that I have a long journey ahead of me to make significant and informed financial decisions.

In pursuit of this goal, I regularly take courses and watch videos related to various investing techniques. I strive to stay updated on the current economic situation by reading economic magazines and newspapers. Additionally, I make an effort to engage in conversations with experienced and knowledgeable individuals to learn from their investment journeys and experiences. 

I believe that by taking these steps, one can gain an advantage over their peers. Investing is a long-term endeavor, so I am okay with making occasional mistakes as long as I learn from them.

Do you follow social media influencers and follow their investment advice?

Of course, I follow social media influencers, and I admit I have learned a lot from them. I have gained valuable insights from individuals like Akshat Shrivastava and CA Rachna Ranade. Ankur Warikoo is a name familiar to everyone in my age group. 

Nevertheless, it is essential to approach every piece of information with a dose of skepticism. For instance, the advice about investing in cryptocurrency is one area where many influencers have gone awry. While the crypto market might improve over time, currently, it serves as a significant lesson for all.

To be candid, I have also heeded their investment advice, experiencing both successes and failures. Hence, despite the valuable insights provided by certain social media celebrities, I have come to realize that before making any substantial financial decisions, it is imperative to fact-check, consider alternative perspectives, and consult with financial professionals.

Do you talk to your mother or your father about money and learn from them or follow their advice?

I am a young individual, and I enjoy discussing all my financial decisions and money habits with my family. I glean insights from their firsthand experiences and strive to adhere to their advice. Each person's relationship with money is distinct, and by maintaining an open mind and attentive ears, one can gain valuable knowledge from everyone. 

I make an effort to comprehend their viewpoints and gain a deeper understanding of their experiences, including how certain situations could have been avoided. The crux lies in maintaining a willingness to learn and deriving enjoyment from the process.