Remember how your parents always told you it was difficult to take a loan? Well, times have changed and so have people. While opting for a loan might be just as difficult now, people's intentions for taking one have most certainly changed. A company that lends money to working professionals conducted a study which found that in today's age EMI financing and medical expenses are the biggest reasons for which millennials avail loans.
“Easy access to borrowing, living away from parents, and independence from needing to support dependents, along with low levels of financial literacy on the true cost of borrowing are common reasons why millennials are borrowing more. In addition, lack of focus on creating a contingency fund is a cause for borrowing for health emergencies," said the CEO of a company.
Most millennials these days already live away from their family. Their lifestyle is such that they want their own car, their own house and they want to live on their own. What they don't want is to compromise on their style of living. This is causing more people to take loans. “Millennials believe in socializing, and being part of a group comes with its own problems. A group usually has people with different income levels and there is a desire to belong without completely understanding your own financial capabilities," he added.
The CEO further said that rather than borrowing money, it is best to come up with a plan. One must learn how to make and stick to a budget rather than looking at another's lifestyle and wanting to have the same one. “Save before spending; separate your fixed and discretionary expenses. Have a portion of your income move to investments as soon as your salary is credited to cover contingencies. Remember that incomes can fluctuate and, therefore, avoid borrowing for today’s spends just because you expect your future income to increase," he concluded.
