A guide to saving for millennials

For the 'FRIENDS' loving millennial generation, no one told them life was going to be this way. These individuals born between 1981 to 1996 had to roughly gauge their young adulthood and formative teenage years through several technological innovations, cultural resets and economic ups and downs.

Millennials, who are still somewhat reeling from the financial crisis of 2008, have now been faced with brand-new adversity: a global pandemic. While the health-related repercussions of the pandemic have unveiled the need for strong immunity, these unprecedented times have also uncovered another financial asset most millennials have long ignored, which is saving.

This fast-moving generation is one of the key players of the gig economy, where hopping from one job to the next is a common trend, especially to keep up with the ever-increasing expenses. Navigating through life in 2020 does not come cheap and the millennials know this fact by heart. However, most millennials overlook the advantages of saving some of their hard-earned money which could prove to be especially beneficial on a rainy day.

Nonetheless, millennials all over the world are not entirely unaware of the benefits of saving. As a matter of fact, recent studies have found that millennials stood out among other generations for their proactive response to the pandemic induced recession. According to Wells Fargo's 2020 Annual Retirement Study, which surveyed over 4,500 Americans, 18% of millennials have begun saving more for retirement since the pandemic began. Even though some millennials are on the same page with saving for retirement and other needs, there are some among them who are not entirely sure where to begin or how to even begin saving. 

While there are multiple ways to save, a feasible place to start is through financial instruments offering forced savings. Such instruments not only allow for saving but simultaneously provide an opportunity to grow wealth. The financial instruments could either follow a systematic investment plan, wherein you invest a fixed sum of money at distinct intervals in your choice of fund or a recurring deposit from any financial institution. A deposit pension scheme or DPS is one of the most popular saving instruments as it is arguably the easiest automated savings option for anyone with an income. Once a deposit account is opened, a fixed amount is deducted from the main account and deposited into it and the deposit account earns a nominal interest rate which is paid at maturity. A DPS is especially a coveted savings option for those employed in the private sector to ensure a smoother transition to retirement when the time comes.

Besides DPS, there are a plethora of other deposit schemes available in the market. For instance, IPDC Finance Limited has some of the most attractive saving schemes including the Millionaire deposit scheme, Ultiflex deposit scheme etc.

Ultiflex offers absolute flexibility in saving. This can be opened with an initial investment of BDT 5000 only followed by installments paid over the tenure of the deposit account. More importantly, there is no binding of paying the installments monthly or on a particular date. The depositor can pay the amount whenever he or she wants. Even the depositor can pay twice or more times in a month. The depositor can also avoid depositing any amount in a month. Within a minimum tenure of 24 months, the depositor can deposit any time, any amount as per his or her convenience. Millionaire Deposit Scheme also starts with an initial investment which is BDT 50000 minimum. This is followed by monthly installments. At maturity, the depositor will get in total BDT 1 million.

The most obvious benefit of investing in such instruments is that it imbibes a savings habit which is necessary for wealth creation in the long run. Other benefits include money reserved for emergencies and achieving short and long-term goals like buying a house or a car or even saving up for retirement. Additionally, for the thrill loving millennials, investing in the stock market with a basic understanding of how it works could also be a way to utilize your savings. On the other hand, the risk-averse individuals with a penchant for saving can look into government bonds and fixed deposit receipts (FDR).

However, those who are reluctant to consider financial instruments can always formulate a budget plan and cut down on their discretionary income.

While the spending habits of millennials are divisive as a variety of opinions exist on the matter consisting of contradictory views with supporting statistics, the need for saving is unanimously agreed upon when it comes to this liberal and upbeat generation.