In today’s world, financial knowledge is an essential part of becoming a responsible adult. Having good financial sense helps young adults to understand how to make wise money decisions that can help them achieve their goals and avoid debt-related problems. In order to comprehend what money means to today's youth in a growing world, this series explores students and young working professionals and their perspectives on money and finance.
Aarav Sethi of Ramanujan College, University of Delhi tells MintGenie in an interview about how having the right set of peers and mentors have helped him to broaden his perspective on finance and money management.
As a 20-year-old banking and finance undergraduate student, he is currently working at a wealth tech startup and is passionate about consulting and the macro global economy and finance. He serves as the vice president of the college’s consulting club and has a deep interest in geopolitics.
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?
The first encounter with money usually starts with board games like - Monopoly, followed by money that one receives at festivals and occasions from their elders.
In economics, we are taught it is a measure, a medium, a standard, and a store. As we grow up and binge-watch series and rom-coms we encounter a phrase/dialogue - Money is not everything. Half quotes are dangerous, Warren Buffet quoted “Money is not everything. Make sure you earn a lot before speaking such nonsense.” Having said that, I believe it's not an end, but rather one of the means to achieve ends at the same time its value shouldn't be discounted/undermined.
In the short term, it certainly is the driving factor in decision-making. Having read about prioritizing learning over money at the initial career phase has certainly changed my viewpoint. One has to have a wider purpose than money to feel satisfied in the long run. The best thing money can buy back is your time and freedom, the ability to work at will with a purpose.
What do you spend your money on every month at the moment? Can you give a breakup in percentage terms?
Being a college student one’s major expenses heads would be travel, hangout & food, and apparel. This will definitely be different for outstation students. Being health conscious I only go with home-cooked meals so travel would be the highest proportion of expense, Followed by purchases such as desk & tech accessories or books and miscellaneous would include subscriptions to OTT and edutainment content.
To sum up 30%: travel expenses, 10%: Books, 30%: Accessory purchases, and 30%: miscellaneous expenses.
What are the things you want to spend money on?
Upskilling for sure would be first, be it conferences, certifications, or even networking opportunities. I do endlessly scroll tech gadgets and accessories, will add a few. This list might seem too small, but that's the way I think about money. I prefer it as cash in hand or at a bank than in spent form on materials. Not to forget the investments.
Do you save money? If yes, how frequently and what do you do with this money?
Yes, almost all of my inflows turn into savings. I prefer maintaining a certain threshold as bank and cash, everything over and above is channelized through financial products and schemes. Coming to the part “ what do you do with this money ” I believe it's not necessary to have a reason to save, it is and should be natural to save a part by deferring current instant gratification from consumption in lieu of future provisions. It is how humans have evolved, even a kid saves some candies if he receives a bag full of them.
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?
Being a firm believer in having a holistic purpose and a calling at the same time having a reason to wake up motivated each day. Some words that click in mind by the word “job” would be needs & desires, security, challenging work, and the plethora of growth opportunities.
The top factors under consideration apart from CTC would definitely be culture and environment at the workplace comprising the firms' ethos, their purpose, does their existence solve a wider issue of mankind. Also, the work that I do there is unique to me or can it be done by someone else in my place and I can contribute better at other places. One should definitely find a fit than being a misfit. After being satisfied with the choice of the firm by the aforementioned factors, the next most important thing would be the potential to rise.
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?
I believe in passive investments. There is a lot of noise portraying that young adults should invest in experiences than financial products but I disagree with this thought school. Investments at an early age definitely don't make one a millionaire, given that the principal amount is less the compounding is also less. But, this jumpstart ensures financial discipline which becomes very hard to inculcate late in life.
Coming to how I go about with parking my surplus, banks are a big no. I maintain a certain minimum balance and the rest is invested in mutual fund schemes through SIP. Why not banks - the answer would be simple maths, keeping inflation at 10%, interest on savings account at 4% it is a clear 6% loss of the principal amount kept at the start of the year. This calculation doesn't even factor in the time value of money, opportunity cost etc.
As mentioned, I have exposure to international and domestic markets through index mutual funds. I believe, direct stocks are the best way to create wealth, given that one has time and skill most importantly the attitude to dissociate from biases.
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?
There’s a lot to learn, the best part about finance is that it's so everchanging yet some principles have been working well since the beginning of civilization (a book worth multiple re-reads on similar lines - The Richest Man in Babylon). The vastness of finance makes this a both yes and no answer. Instead of complicating my relationship with money, sticking to some basic thumb rules & personal finance books does the trick.
I do consume a lot of animated content, and documentaries on greatest investors, even Hollywood has given us many gems related to this topic. Claiming, that one knows savings and investment completely is flawed, as it will definitely shift with age and priorities. Having the right set of peers and mentors has certainly helped me to broaden my perspective as well as give me depth.
Do you follow social media influencers and follow their investment advice?
No, not at all. Stock tips telegram groups are even worse. In fact, I am glad that SEBI is coming to the rescue of retail investors to tighten the scrutiny on pieces of advice by influencers.
Do you talk to your mother or your father about money and learn from them or follow their advice?
Not much, given my prudent outlook on the money they don't have to worry much about my saving and spending habits. Instead of taking direct advice, growing up I certainly have inculcated some values and principles when it comes to money situations, that I observed from my parents. Coming to financial instruments, they tend to stick to the conventional ones that may or may not work for my risk appetite and age. Sticking to principles and altering the instruments works well for me.