5 ways millennials can start saving in 2022 – Forbes Advisor INDIA

Millennials make up a significant portion of India’s workforce and are slowly becoming the primary breadwinner. However, Indian millennials have a poor saving record. The saving trend is taking a back seat to most millennials, as reported by a Deloitte survey that found Indian millennials save less than 10% of their income.

Given the times we live in, savings should be a top priority, and the good thing is, it’s not rocket science. Millennials can start their savings journey in 2022 with minimal hassle with these simple ways.

1. Strictly apply the 50/30/20 budget rule

The 50/30/20 budget rule is a simple and effective way to manage finances and get into the habit of saving. The proposition under this rule is simple. You spend 50% of your income on basic necessities, that is, essential expenses. These include:

  • To rent
  • Grocery and utility bills
  • Children’s school fees
  • EMI and insurance premium

After spending 50% on needs, wants make up the next 30%. Wants are lifestyle expenses like going to a restaurant, buying an expensive gadget that is over budget, etc. More often than not, needs become wants when we take them beyond the bare essentials. After meeting the needs, millennials must save 20% of their income.

The beauty of this rule is that millennials can apply it regardless of their cash flow. This gives them the opportunity to save at least something on their income. The 20% monthly savings will add up to a sizable corpus in the future.

2. Start a Systematic Mutual Fund Investment Plan (SIP)

A systematic investment plan or SIP in a mutual fund is another option Millennials have available to start saving. In an SIP, a specific amount of money is deducted from your savings account and invested in the fund of your choice on a fixed date. SIPs bring discipline in investing and help accumulate the desired corpus for different life goals in a disciplined and sustained manner.

However, the latent advantage of SIP is that it results in forced savings. As the money is invested on a specific date, it automatically results in the desired savings. SIPs bring other benefits to the table. They help you:

  • Stay invested through market cycles
  • Helps rack up more units when markets are down and vice versa
  • Instills a disciplined saving habit
  • Brings the power of long-term compounding that increases your wealth exponentially

Depending on their needs and cash flow, millennials can set up SIPs on a weekly, biweekly, or monthly basis. SIPs in equity mutual funds also help generate returns that beat long-term inflation and help achieve long-term goals such as children’s education and retirement.

However, for SIPs to generate the desired returns, it is crucial to choose a fund with a consistent long-term track record. New investors must be KYC compliant before starting SIPs in their fund of choice.

3. Avoid lifestyle expenses

Overindulging in lifestyle spending can be counterproductive. Thanks to digitization, millennials can easily avail loans with just a few clicks. There are several portals and applications from which one can apply for loans in a jiffy. However, these lifestyle loans are an expensive proposition. They carry a premium rate of interest which pushes up the EMI amount significantly.

These strain finances, and if even an EMI is missed, the credit score takes a hit. Moreover, lifestyle expenses add no real value to wealth. In difficult times like Covid-19, maintaining lifestyle expenses can be quite difficult when incomes are already under pressure.

Millennials can save this money, which could significantly enrich their corpus in the long run. Stopping eating out every weekend, avoiding the urge to switch smartphones every six months, and making small lifestyle changes can save a good amount of money.

4. Buy health insurance

A medical contingency can wipe out some of the savings all at once. Even a few days of hospitalization can lead to bills of up to thousands of rupees. However, things may be different with a health insurance plan in place.

A health plan avoids out-of-pocket expenses and ensures that funds are not lacking to receive the best possible treatment. For millennials in the metros, it is advisable to buy a health plan with a sum assured of at least INR 10 lakh. A floating family plan is ideal for providing coverage to all family members.

Besides buying a regular health plan, millennials should also expect to buy a critical illness insurance plan. Treatment of critical conditions such as stroke, kidney failure, liver transplant, etc. is quite high and the coverage provided by a regular health plan may not be sufficient to cover the full cost of treatment.

In such a scenario, a critical illness insurance policy comes to the rescue as it provides a lump sum to treat the illness regardless of the cost of hospitalization. Critical plans are fixed benefit policies, unlike regular plans which only reimburse actual hospitalization expenses.

5. Do not go into debt unnecessarily

Getting into unnecessary debt can often become a noose around borrowers’ necks. Not all forms of debt are bad. Debt incurred to learn a new skill or buy an asset is good, but debt that satisfies instant gratification could spell trouble for millennials. Swiping credit cards for every small purchase is not a good idea because credit card interest rates are higher.

Also, paying only the minimum balance is undesirable. Therefore, before going into debt, millennials need to analyze whether they need it or not. It is also essential to read the fine print of loan documents to avoid surprises later.


Just like investing in stocks, millennials need to take a long-term approach to saving. They should start their savings journey the day they start making money so they have a solid financial footing and can easily weather the ups and downs.

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