From emerging technologies and innovative ideas to changing policies and cultural shifts, the Indian personal finance landscape is undergoing rapid transformation. With recent trends in finance, we have the chance to embrace modern and advanced methods of managing our money effectively. Keeping pace with these changes is very important. Understanding the latest Personal Finance Trends can give you the edge you need to stay ahead of the curve and secure a peaceful financial future. In this blog, we’ll take a deep dive into five recent trends in the Indian money market that you should be aware of in 2024.
1. Buy Now Pay Later (BNPL) in Personal Finance
Buy Now Pay Later (BNPL) is a new way to make small purchases, and it works exactly as the name suggests. It offers consumers the flexibility to make purchases upfront and defer payment for a later date. The consumers then pay back the BNPL provider in instalments. While we may call it new now, we Indians have actually been using a familiar concept for a long time! When you buy groceries at the kirana stores, you can request the shopkeeper to settle your bill at the end of the month. That way you can pay the entire bill when you receive your paycheck. It’s convenient, and hassle-free, and there’s no interest involved. With Buy Now Pay Later, this option has opened up in the online shopping space, so this convenience is now extended to digital transactions.
When you make a purchase through BNPL, the financier steps in to cover the cost of the purchase on your behalf, and then you have to repay the provider the amount owed in manageable instalments, usually without interest – a very attractive feature. But remember that it’s important to adhere to repayment schedules diligently, as it can mean interest charges and penalties. The retail landscape is changing fast. With more and more retailers adopting BNPL, consumers have an alternative method for making purchases.
Now, you might be wondering, how does Buy Now Pay Later differ from a credit card? Firstly, while credit cards may impose higher interest rates, BNPL tends to offer more favourable terms. Secondly, BNPL is more accessible, as it generally places less emphasis on a person’s creditworthiness compared to credit card applications. However, it’s important to note that, unlike credit cards, BNPL does not contribute to building one’s credit history. Late payments on BNPL purchases can also negatively impact your credit score. Also, while credit cards are widely accepted across various platforms, BNPL’s acceptance is more limited for now, although its consumer-friendly approach is contributing to its growing popularity.
2. Rise of Cryptocurrency in Personal Finance
Cryptocurrency has taken the personal finance world by storm in the last decade or so. For many around the globe, it has emerged as an alternative investment option due to its decentralised nature, potential for high returns, and the promise of changing traditional financial systems. Simply put, cryptocurrency is a form of digital currency. It operates on decentralised networks based on blockchain technology and uses encryption techniques for security. Due to this individuals are able to conduct peer to peer transactions without the need for intermediaries like banks or governments, which gives them greater freedom over their finances.
In India, cryptocurrencies are not considered legal tender, but they can still be traded. Since there is no official regulatory body for cryptocurrency here, investing and trading are done at the investor’s risk. Recently during the Union Budget 2022, the government introduced a 30% tax on digital assets such as cryptocurrencies and NFTs (Non-Fungible Tokens), but still, there is no clarity regarding the Crypto Bill.
The blockchain technology used by cryptocurrency continues to evolve. More and more individuals have started accepting cryptocurrency as a viable option. Will it ever become a mainstream option? Will it truly revolutionise the realm of finance as we know it? Well, those are questions that remain to be answered.
3. AI-Powered Financial Management Tools
Experts believe with good reason that Artificial Intelligence will reshape how we approach many aspects of our lives, including how we manage our finances. AI is fed user data and relevant market data, and it uses advanced algorithms and data analytics to analyse patterns and predict market trends. Based on the results, it provides users with personalised recommendations. It works in real-time, meaning it can adapt to changing market conditions instantaneously. Thus the insights it provides are up-to-the-minute. AI eliminates a lot of guesswork, so it makes financial decision-making a much, much easier task.
There are many AI-powered tools available that can help you achieve the many objectives of financial management, such as:
- Setting and Tracking Financial Goals
- Budgeting
- Expense Tracking
- Debt Repayment
- Risk Analysis and Management
- Comprehensive Investment Analysis
- Effective Portfolio Management
- Real-Time Analysis
All of this is done accurately, efficiently, and quickly. And it happens whenever you want, right at your fingertips. AI analyses your financial situation and market trends in real-time and offers insights specific to your situation. AI can even help you detect and avoid cyber fraud, which is unfortunately on the rise everywhere. The speed at which AI has evolved in the last couple of years is almost scary, but exciting nonetheless. And it’s only going to get better from here on out.
Also Read: Role of AI in Financial Planning & Analysis
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4. Sustainable Investing
As investors, we have an abundance of options when it comes to where we allocate our funds. When we look for suitable options, we consider many factors such as our financial situation, goals, risk profile, type of financial product, company or funds past performance, and many more. We analyse these factors to maximise the returns while mitigating risks. In recent years, some investors have added another dimension to their investment planning criteria: Sustainability. Sustainable investing refers to the act of investing in companies that prioritise Environmental, Social, and Governance (ESG) factors on top of financial returns.
The rise in this trend shows a growing awareness of environmental and social responsibilities among investors. Many investors believe that it is unethical to invest in shady companies that are contributing to the destruction of the environment or societal structure.
Let’s take an example:
Us Indian investors are particularly feeling the effects of climate change. Some investors analyse the carbon footprint of the companies they invest in, along with how much the company contributes to environmental pollution, waste, water wastage, deforestation, and so on. It’s often found that companies neglecting environmental, social, and governance factors prioritise short-term gains and don’t look at the big picture that lies beyond.
Make no mistake, just because sustainable companies don’t focus on quarterly profits that doesn’t mean it wouldn’t be as profitable to invest in them. In fact, companies that commit to a sustainable future showcase they are forward-thinking and proactive in addressing long-term risks and opportunities.
Also Read: What is Budgeting in Financial Management? A Complete Guide
5. Remote Work’s Influence on Financial Habits
The COVID-19 Pandemic changed the world in quite a lot of ways. One such way was the widespread adoption of remote work. Given the lockdowns, remote working was pretty much necessary in the beginning. But even after restrictions were lifted, work from home quickly became the preferred option for many. Factors such as convenience and the opportunity to be close to family played a role in this shift of preferences, but one of the most significant drivers behind the rise of remote work was its impact on personal finances.
Most workers, especially salaried workers in India have to move to huge metropolises for employment opportunities. The rent in these big cities can be quite high, and make a significant dent in a person’s monthly savings. With remote work, many individuals get the flexibility to choose their housing options. This means more savings, more investments, and more resources that can help them achieve their financial objectives faster. They spend less and are able to budget more effectively
Recent studies have even shown that productivity tends to increase when working remotely. This may be because employees are able to maintain a better work-life balance while working remotely. As more employers become aware of this trend, many are now offering employees the option to work remotely as they recognise the mutual benefits it can bring.
Conclusion
Things move fast in today’s world, and it’s important to keep up the pace. These are just some ways technologies, culture, and policies are influencing how one manages personal finances. And most of these trends are in their infancy. Buy Now Pay Later is a convenient consumer-friendly way to make quick purchases, and is being adopted by an increasing number of retailers.
Cryptocurrency has started to solidify its position as a legitimate asset class in the global financial landscape, as investors in India await regulatory clarity from the government. Artificial Intelligence is revolutionising how we manage our finances by giving us personalised insights and helping us make informed decisions. Sustainable investing is helping investors think ‘long term’ in more ways than one. Remote work has changed workers’ financial management for the better and given employers something to think about. These popular trends still have a long way to go, no doubt, but their promise holds the potential to reshape the future of personal finance.
Also Read: Financial Advice for Young Adults
