Making Millennials Millionaire: Here is a plan to get rich, avoid debt traps

Making Millennials Millionaire: A good financial plan is essential not only to create wealth but also to ensure that you do not fall into the dangerous realm of debt trap that could destroy your life. A good financial plan is all about good budgeting and discipline to stay within the budget. So what is good budgeting? 

The very first thing we need to do is to understand on what we are spending and how much. This starts from seeing our Bank statement and understanding our spends. The expenses generally fall into 5 categories 

Things you can avoid or change and expenses that you cannot change Expenses you cannot change – Bank EMI, Mobile bill, broadband bill etc Expenses you can/maybe change – Rent, Groceries, entertainment, etc.

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When you don’t think of savings, each expense item will have unnecessary spends. You may be spending too much of luxury grocery, spending too much money on entertainment and eating out, may be staying at a higher rented place than necessary etc. 

Next step is to look at all the line items and make a considered budget for each:

The best part here is that if equity performs, there is a chance that you will make at  least 15% to 20% more than the said net worth! 

Question: Do you really need to use it for a car now or a house or none of these? Ever? 

Thought: Car is depreciating; House is binding. If you buy house now with your existing salary, it stops you from going to a bigger home when your salaries and savings increase. salary may increase substantially if you are good. So time buying your home, delay buying your vehicle. 

Also, every year, your salary would increase, and this means your savings too that will add up substantially to your net worth. 

Conclusion: 

In short, to make wealth, you need to budget after cutting unnecessary spends and be disciplined to stick to the budget. 

(Authored by Shashank Udupa, Co-founder and CFO at Avalon Meta)