Indonesian Youth Turn to E-Wallets for Savings: Balancing Convenience and Financial Discipline

The Rise of Digital Savings Among Young Indonesians

The savings habits among Indonesian youth are showing a positive trend, driven by increasing financial literacy and more open discussions about money management compared to previous generations. Financial planner Budi Raharjo views this shift as a positive signal for the future financial management of younger generations. According to Budi, millennials and Gen Z are now incorporating financial planning into their lifestyle.

The Double-Edged Sword of E-Wallet Usage

The convenience of digital wallets has made them particularly popular among Gen Z, who are accustomed to non-cash transactions. However, Budi warns that e-wallets have limitations as a long-term savings tool. While they facilitate easy transactions, this convenience can also lead to impulsive spending. Moreover, funds stored in e-wallets are not protected by LPS (Lembaga Penjamin Simpanan) insurance, unlike bank deposits.

Balancing Digital Convenience with Financial Prudence

Despite these drawbacks, Budi acknowledges that e-wallets can still play a role in the financial ecosystem of young people, especially if they offer features like automated savings or basic investment options. These features can serve as an entry point for financial management for beginners. However, for long-term financial goals, more sophisticated financial instruments with better risk management are necessary.

Strategies for Effective Savings

Budi emphasizes the importance of setting realistic savings targets from the outset. He advises young people to allocate a portion of their income to savings as soon as they receive it, rather than waiting until the end of the month. Another crucial step is to separate transaction accounts from savings accounts, which helps control cash flow and reduces the temptation to use savings for everyday spending.

Building a Strong Financial Foundation

In the face of economic uncertainty, Budi stresses the need to establish a solid financial foundation. This includes meeting basic needs, maintaining a reasonable lifestyle, and preparing an emergency fund as a financial buffer. Additionally, having health protection, such as BPJS (Badan Penyelenggara Jaminan Sosial), is crucial for preventing health issues from destabilizing one's finances.

Investing Wisely

When it comes to investing, Budi advises young people to clearly understand their financial goals before making investment decisions. He warns against the Fear of Missing Out (FOMO), which can lead to impulsive investment choices. Instead, he recommends adopting a disciplined investment approach that aligns with one's risk profile. For beginners, simpler investment instruments such as money market mutual funds, fixed-income funds, large-cap stocks, and gold are considered safer starting points.

The Importance of Financial Education

Budi underscores that strengthening financial education is key to enabling younger generations to think long-term about their finances. The better their understanding of money management, the more informed their financial decisions will be. As a simple benchmark, he suggests that young people regularly review their personal financial condition, including monthly budgets, cash flow surpluses, emergency fund adequacy, active protection, and loan repayments within healthy limits.