Join top finance influencers Rachana Ranade, Sartak Ahuja, Mukul Malik, and Sanjay Kathuria as they dive into Gen Z’s changing money habits. This session explores insights on high EMI usage, generational wealth, distinguishing good vs. bad debt, the impact of social media on financial education, the myth of early retirement, and the power of long-term investing for India’s economic growth. Discover how consumption patterns, risk-taking in investments, and the focus on financial freedom are shaping the next generation’s financial psyche.
The session “Zindagi Na Milegi Dobara: Gen Z’s Money Mindset” at the Business Today India@100 Summit takes a deep dive into the financial psyche of India’s youngest earners
“Did you watch it? Notice how the speakers emphasized that Gen Z isn’t chasing just ‘quick money’—they’re building long-term financial habits with the help of digital tools. Please see below the quick summary of the discussion
Key Observations on Younger Generations’ Money Mindset:
• Generational Wealth and Instant Gratification: Many Gen Z individuals are benefiting from generational wealth, which allows them to “follow their heart” and purchase the latest items like iPhones and expensive sneakers. This often leads to a mindset of “we also invest, but we also are on EMI’s”.
• Prevalence of EMIs: A significant portion of consumer purchases are made on EMIs. For example, 70% of iPhones in India are bought on EMIs, and 27% of vacations are also taken using EMIs. During major sales events like Amazon’s “Big Billion Days,” 75% of sales are on EMI.
• Social Peer Pressure: High social media exposure creates pressure to conform and purchase the latest trends, such as Jordans or Sambas. The availability of zero-cost EMIs makes these items easily accessible, fueling consumption.
• Consumption-Driven Economy: India’s current per capita GDP of approximately $3,000 marks an “inflection point” where discretionary spending skyrockets. Consumption accounts for 60% or more of India’s GDP, making it a key driver of economic growth.
• Risk-Taking in Investments: While there’s increased awareness of new investment avenues, younger generations are also making “bets on risky investments.” For instance, 93% of people engaging in futures and options trading lose money.
• Funds as Freedom vs. Security: There has been a “subtle transition” where the upcoming Gen Z and others view funds and finances as a means to achieve “freedom,” whereas Gen X typically considered them a source of “security”.
The Problem of “Bad Debt”:
• Defining Bad Debt: Bad debt is characterized as debt taken “to consume”. Examples include using EMIs for consumer goods like those sold during Amazon’s sales.
• Consequences: Credit card debt in India has spiked by 44% in a single year. There is a significant lack of financial awareness, with some individuals mistakenly believing that paying minimum dues on credit cards, even at high interest rates (e.g., 3.5% per month), is a good idea because it’s lower than what they earn on fixed deposits (e.g., 6% annually).
• Good Debt vs. Bad Debt: In contrast, “good debt” is when debt is used to “build something,” such as a house, a shop, a piece of land, or a startup, which can generate future value.
The Role of Social Media in Financial Education:
• Risks of Short-Form Content: Learning about money and finance from short social media reels (30-second to 1-minute) is considered a “big risk”. This content is compared to “protein chips” in a “media diet”—it cannot replace a full meal.
• Need for Deeper Understanding: Reels should only serve as a “trailer” or “top of the funnel awareness”. Audiences are encouraged to go deeper by watching longer videos (e.g., 15-minute videos) or participating in multi-day programs to gain comprehensive understanding.
• “Thinking Fast and Slow”: Drawing on Daniel Kahneman’s concept, some decisions, like buying stocks, require “slow” thinking, analysis, and spending time to evaluate the investment and the person providing the advice. Making such decisions based on a quick reel is “not right”.
Insights on Retirement and Financial Planning:
• Retirement at 40 – A Myth for Most: While many aspire to retire by 40, online calculators often reveal this goal is “way beyond their reach” for 90-95% of people; only a small percentage (5-10%) can realistically achieve it.
• Subjectivity of Financial Needs: There is no universal “ballpark figure” for the amount needed for financial freedom. It is “very, very subjective” and depends on individual lifestyles. Online calculators are available to help individuals determine their specific retirement needs and plan accordingly.
• Importance of Habit: Developing a consistent habit of investing, even with small amounts (e.g., thinking a ₹25,000 salary is ₹24,000 to save ₹1,000), is crucial for long-term wealth building, regardless of current income level.
Key Financial Advice for Young People:
• Build Skill Set and Increase Capital: The first step is to “increase your capital” by taking courses and enhancing one’s skill set, which ultimately boosts earning potential.
• Start Early with Compounding: Understand the “simplest formula of wealth building” – compound interest. Start investing as early as possible to maximize the “time period” (N) factor in the compounding equation. Mutual funds are a good starting point, even with small amounts like ₹100.
• Avoid YOLO and FOMO: Young individuals should overcome “You Only Live Once” (YOLO) and “Fear Of Missing Out” (FOMO) mindsets. Instead, adopt “POLO,” meaning “Plan Or Lose Out“.
• Long-Term Investing is Powerful: The power of long-term investing, even with modest consistent contributions (e.g., a janitor becoming a millionaire or a hypothetical ₹1,000 SIP in Berkshire Hathaway over 60 years yielding ₹700 crores), is immense.
• Budget and Prepare for Emergencies: It is essential to maintain a good budget, understand where money is being spent, and prepare for life’s emergencies.
• Systematic Withdrawal Plan (SWP): This is a “very, very magical” concept for managing a corpus in retirement. It involves investing money in a fund and withdrawing an amount such that the “withdrawal rate is lesser than your compounding rate,” ensuring the money never runs out and continues to generate passive income.
• Caution with Credit Cards: It is advisable not to have too many credit cards and to avoid falling into the trap of minimum payments and high interest rates. Prioritize increasing income rather than dedicating significant mental bandwidth to optimizing small savings from smart credit card use.
• Bet on India: Given India’s significant growth rate (7% above inflation) and the large Assets Under Management (AUM) in Indian mutual funds, investing in the top 500 companies of India (e.g., Nifty 500) is considered a strong long-term bet.
Future of Investments:
• Stocks will Remain Key: Stocks are expected to remain the “highest money-making instrument” that have an underlying asset.
• Fractional Shares: The introduction of “fractional shares” in India is anticipated, which would allow individuals to buy portions of expensive shares (like Berkshire Hathaway, costing ₹6 crores for one share) that are currently out of reach for most.
Disclaimer
Please Note: This conclusion and the preceding summary are based on excerpts from a panel discussion titled “Gen Beta’s New Money Mindset | Rachana Ranade, AssetYogi & More At BT India@100,” featuring prominent financial influencers. The views expressed and information shared by the panelists are their personal observations, opinions, and general insights into financial trends and strategies.
This content is intended for informational and educational purposes only and does not constitute personalized financial advice. The financial landscape in India is diverse, and as noted by the panelists, generalizing financial statements can be challenging due to significant economic divides