In the modern world, financial literacy has become increasingly important for young people. With the cost of living ever increasing, it is essential for young people to gain an understanding of how to manage their finances and make informed decisions about how to save and invest their money.
Aagam Jain of Shaheed Bhagat Singh College, University of Delhi tells MintGenie in an interview about how he has started a mutual fund SIP that motivates him to save a specific amount every month. He has had internship experiences from prestigious organizations such as EY India, Niti Aayog, IIM Shillong, and a tech-based startup. Aagam has a strong interest in the research and consulting sector and plans to pursue a career in that.
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?
Although money has been widely known for its uses and the fortunes which one may get with it, for me, as a student, money is limited as a source that helps me in paying my expenses and a medium that helps me invest in myself for future growth.
Before making any decision, money is an important criterion for me, especially considering my middle-class family background. For example, when I plan to appear for MBA entrance exams next year, I will carefully examine the fee structures of various institutes and weigh my options accordingly, since pursuing an MBA comes with hefty costs for fees and accommodation.
What do you spend your money on every month at the moment? Can you give a breakup in percentage terms?
I depend on my parents for financial support, and I use it mainly for accommodation and food expenses since I am living in Delhi, far from home. Additionally, I use some of the money for travel costs, occasional parties and meetups with friends, and exploring Delhi since it is my last semester here at the University of Delhi.
Typically, I spend around 30% of my budget on rent, 30% on food, 10% on travel, 5% on gym fees, and the remaining is used for miscellaneous items. Although this varies from time to time as I do try to save as much as possible.
What are the things you want to spend money on?
I am passionate about learning new things and traveling. In fact, I consider myself a philomath or continuous seeker of learning. Additionally, I prefer to invest in experiences and knowledge instead of material possessions. Even during the lockdown I was trying my best to utilize that time and focussed on the skills which might help in the coming times such as typing etc. I love investing my money in something that adds value to me, be it in terms of experiences or my learnings.
Do you save money? If yes, how frequently and what do you do with this money?
I started saving some money every month when I moved to Delhi. To avoid the risk of investing all my money in the volatile stock market, I decided to invest in Mutual Funds SIP. It motivates me to save at least that minimum amount from the money I get from my parents monthly. I have made it a goal to not use this fund unless it is for something special, like a gift for my parents or a solo trip to Rajasthan.
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?
Having a job is a sign of financial freedom, as it allows individuals to take decisions that have some sort of monetary impact. A job is also the first step of the ladder of success, as it provides an opportunity to learn and improve soft skills, gain experience working in a team, and develop the ability to manage work-life balance, and perform well under stress.
While jobs can be criticized, they often provide a range of growth and learning opportunities. When considering a job, two key factors I consider are work-life balance and growth opportunities.
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?
Investing in the stock market can be very risky for those without the appropriate knowledge and experience. Individuals with good knowledge can double their money in a year, but the case is not the same for someone who doesn’t know. I feel investing in mutual funds is a safer option, as money is managed by professionals, though the return is a bit low comparatively, but we don’t end up losing all we saved. Once I start earning, I will consider investing in stocks.
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?
Yes, I do understand what saving and investing are. I got the idea of the same when I shifted to Delhi. I realized that it's never a safe option to ask someone to help you out if you need money in any emergency. One should save even a small proportion from their total pool of money, not to get high returns but to support themselves when in need.
I started doing SIP two years back and it has given me good returns along with that comfort that, yes, if in case I need money I have this much amount of it saved. Money is the factor of comfort and luxury, but saving requires discipline, especially when you are not earning and are young.
So, I used the option of autopay in SIP, which automatically deducts the required amount from the linked bank account. It has two advantages: I do not forget to pay my SIP and I do not end up spending beyond a limit.
Do you follow social media influencers and follow their investment advice?
Yes, I do follow social media influencers who make content on finance, investing, etc. and I came to know about SIP from them only. Although I'm not currently an active investor, I still find their content to be insightful and useful in case I ever decide to become an investor in the future.
Do you talk to your mother or your father about money and learn from them or follow their advice?
I communicate with my parents about my monthly expenses and I believe it is important to be transparent with them. My father has the extensive farming experience, so I often ask him questions about how the prices of land are determined at different locations.
Additionally, my parents always remind me to prioritize my health and food over anything else, and I abide by their advice as I understand that health is true wealth. I don't mind spending a bit more money if it is necessary for my well-being and good nutrition.
