New Delhi: Radhika Gupta, Chief of Edelweiss Mutual Funds, offers a fresh perspective on financial planning for Generation Z with her “savings deducted at source” strategy. In a recent social media post, Gupta addressed the common dilemma of balancing immediate experiences, like enjoying a concert, with the need to save for the future. She introduces her straightforward “10-30-50 rule” from her book, *Mango Millionaire*, emphasizing that life doesn’t have to be an either-or choice between living in the moment and ensuring financial stability. Rather, it’s about finding a harmonious balance that allows for both enjoyment and prudent saving.
Radhika Gupta on Balancing Spending and Saving
Radhika Gupta’s viewpoints resonate with many young individuals who find themselves torn between the desire to live in the moment and the need to invest for their future. During her interactions, she often finds that young people express uncertainty about where to start when it comes to investing. The temptation of attending thrilling events, like a Coldplay concert, juxtaposed with the urge to save can feel overwhelming.
Drawing a parallel with past generations, Gupta highlights that this conflict isn’t new. “My mother still tells me how my father blew up a lot of his salary on buying records,” she reflects, reminding us that finding balance has always been a part of life. Instead of feeling pressured to choose between “YOLO” (You Only Live Once) and saving, Radhika insists that the real challenge lies in creating a balanced approach to both frugality and enjoyment.
Understanding the 10-30-50 Rule
Gupta’s advice is rooted in a practical framework she terms the “10-30-50 rule,” which she elaborates on in her book *Mango Millionaire*, co-authored with Niranjan Avasthi. The essence of this rule encourages young people to allocate their expenses wisely:
- 10% should go towards savings
- 30% can be spent on essentials and lifestyle choices
- 50% should be dedicated to discretionary spending
This simplified method provides a clearer roadmap for managing finances, enabling young adults to save while still enjoying life’s little pleasures. Gupta believes that understanding and implementing these rules can offer a strong foundation for financial success.
Savings Deducted at Source: A Game Changer
One of Gupta’s innovative suggestions, called “Savings Deducted at Source” (SDS), is designed to ensure that saving becomes as automatic as paying taxes. She challenges the common perception that setting aside savings is difficult: “Young folks often tell me even 10 percent feels hard, and then I ask them, well how do you pay tax?”
Her proposal encourages young individuals to automate their savings by setting up systematic investment plans (SIPs), recurring deposits (RDs), or fixed deposits (FDs) directly from their income before they ever see that money. By employing this method, individuals can enjoy financial security while still indulging in personal desires, like purchasing a trendy handbag or launching a startup. “You can do both — buy the handbag and save money for the startup,” she asserts.
The Importance of Enjoying Life
Radhika Gupta emphasizes that financial success should not solely be measured in terms of accumulating wealth. Rather, it’s vital to celebrate and enjoy life’s experiences. “At the end of the day, life is not a race of who has the highest NAV of most rupees, but who has lived most joyfully,” she points out. By finding middle ground between saving and spending, individuals can lead fulfilling lives without compromising on their financial futures.
Gupta’s thoughtful approach provides a refreshing perspective for young Indians navigating the complex landscape of personal finance. As the Indian economy continues to evolve, understanding these concepts can empower Generation Z to make informed decisions, blending enjoyment and financial responsibility.
As we move forward in an era defined by both opportunities and challenges, adopting a balanced approach could be the key to both financial security and happiness. Radhika Gupta’s insights come at a timely moment, encouraging young individuals to invest smartly while cherishing life’s memorable moments.
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Original source: www.livemint.com
