Bad Credit Credit Cards – Do less to earn more
The union budget has been hailed as a landmark budget by most analysts. There are hordes of expert opinions, social media forwards and virtual conversations on how to make money this year as the economy starts recovering. For millennials, knowledge of personal finance has been a perennial pain-point in realising their financial dreams. However, the bigger issue is human behaviour centric nuances that leads millennials to take poor financial decisions.
Minimalism, a Buddhist philosophy, advocates spending brain power on aspects that truly matter and reduce all other forms of clutter. To assist millennials in becoming more financially savvy and making better decisions, leveraging minimalism to address the nuances of their human behaviour might prove to be ‘one giant step for them’.
Reduce glamor inducing plastic and fancy bank merchandises
It is sensible for millennials to have 1 major bank account which accrues all forms of income from salary, business or other sources. Historically, the number of bank accounts has been synonymous with affluence and success but this creates numerous issues with tracking and spending unnecessary mental bandwidth. In addition, it makes immense sense to have 1 credit card which is accepted everywhere to reduce mental bandwidth in tracking statements, investment limits and redemptions of points from multiple cards. To minimise clutter even more, automatic bill payments with established limits should be set up through net banking.
Invest less time to make more money
Many millennials have 40-50 mutual funds which they proudly flaunt assuming it drives effective diversification and gives them a false sense of comfort. Most mutual funds in the same asset class (e.g., large cap funds) essentially hold the same set of underlying companies. What is necessary for millennials is to have just 2-4 mutual funds across asset classes (e.g., large cap, international stock markets, mid & small cap). In addition, if stock trading is not your primary career, it makes little sense to trade daily and more prudent to invest in mutual funds and let the fund manager do all the thinking and live with sleepless nights.
Go slow and do nothing
The financial press is always brimming with articles, hyperactive journalists, opinion pieces (unlike this one) that nudges investors to keep doing something. Too many transactions and tips are counter intuitive. It is advisable to make an investment in the beginning of the year and forget about it after that till the end of the year for a review. In addition, it is prudent to identify expenses and payments (e.g., magazine subscriptions, OTT platforms, online space) which are not in active use and end those. The savings from these might not be small.
Avoid social conversations about personal finance
There is always this acquaintance who invested Rs. 1 lakh in bitcoin or a penny stock a decade back and is now planning to buy a house in Malabar Hill with those proceeds. I have often seen these stories are either fabricated or they consciously avoid the other major losses they have made. Social conversations with half-informed acquaintances are futile and result in your mental bandwidth being occupied with fear of the pot of gold slipping away leading to bad decisions.
Reduce portfolio volatility to avoid unnecessary mental baggage and stress
The biggest source of worry in the minds of millennials is often excessive portfolio volatility. This leads to sleepless nights and constantly checking their portfolios leading to unnecessary mental baggage. Ideally, every millennial should recognise their investment risk appetite and be slightly more conservative with that in investments as most of us are inherently optimistic. In fact, for a truly peaceful mind, the first objective should be to reduce volatility and cut debt followed by maximising returns.
In conclusion, when I was researching for my book, ‘Hacks for Life and Career: A Millennial’s Guide to Making it Big’, inadequate knowledge of personal finance emerged as the one of the biggest pain-points in modern day business education for millennials. Besides knowledge of various instruments, driving appropriate human behaviour through minimalism will go a long way in plugging that gap. In one line, financial minimalism has great benefits in establishing a sound asset book and generating peace of mind. As Garfield would probably agree, doing less often leads to earning more.
Views expressed above are the author’s own.
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Bad Credit Credit Cards – Do less to earn more
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