It is still early days for personal financial planning in India. Much of the focus is on investment planning. Advisers work on clients' financial goals, look at ways to fund them, and the manner in which asset allocation needs to be changed to meet these goals.

This is mostly the case for the current client segments that are reaching out to financial planners. There are the newly rich middle-aged people, who generate a regular and large surplus and are eager to engage a planner to get their investments organised. There are the new parents, who are keen to save for their children and their future, and there are the retired people, who are anxious about outliving their savings. These three groups have an investment orientation.

The market that is waiting to be tapped is the one that needs debt counselling. The growth in consumerism, the large young population that has a completely different take on spending, and the easy availability of credit make for a lethal combination. When there is a rise in confidence about future earnings, the willingness to take on debt increases and the propensity to set aside money for the future falls. We may be off the mark if we think that Indians are culturally big savers and that the saving habit is ingrained in us.

We may have delinked from this past quite significantly. Earlier, we lived through periods of scarcity, low employment, low growth and financial insecurity, which led to high levels of savings for the future. This may be fast eroding as the young do not fear being unemployed.

Higher confidence in the ability to earn in the future directly translates into higher current spending, greater willingness to borrow and lower savings. The financial planners, who routinely advocate that loans are bad and should be avoided, might actually end up closing the door on this segment. Rather than judge the young on their spending or lack of saving, it may be worthwhile helping them manage their finances better.

The first issue to be addressed is how to build a good credit reputation. Several young users tend to seek out deals and packages, and scout around for bargains. They change their cell phones too often, only to avail of 'introductory' offers, and buy clothes and accessories in discount sales.

They may extend this habit to their financial dealings, opening multiple bank accounts, holding several credit cards, and transferring their loans and card dues from one bank to another. With the advent of credit information bureaus, their credit history can be traced across various entities that they use. Building a good credit record is vital since they may require bigger loans for longer tenures, such as for housing. It is important to set up disciplined repayment plans to ensure that all loans are serviced and a good relationship is built with the primary bank (the one in which their income is credited).

The second area where youngsters may need help is in evaluating the cost and pricing of financial products. Our schools teach physics and geography, but time value of money is still not a part of the curriculum. Several make financial decisions by simply adding up present and future cash flows. Worse, many do not know how to compute the correct cost of borrowing.

They simply check if the EMI can be paid from their regular income and take on costly loans. They settle for higher margins for secured loans, pay heavy administrative charges and penalties, use credit cards to draw cash, repay only the minimum amount due on cards, and pay high service charges to banks and brokers. They need professional help in understanding how to choose a loan or restructure and repay existing loans in the same, if not higher, scale than that for investment products.

The third problem that needs to be addressed is the lure for easy money that leads them to choose the wrong financial products. Many youngsters have stock trading accounts and are confident that they can make a few quick bucks on the side. Online trading accounts are aggressively sold by broking firms, whose revenue is enhanced both by transaction fees and interest on margin trading.

Young investors are natural risk-takers, but they only have the willingness, not the ability to take on risks. Willingness is an attitude; ability to take risks depends on the amount of wealth they already have. A few unexpected price movements and most of them lose their shirts, leaving their online accounts inactive, only to open another one once the market turns up. They need advisers to help with allocation and astute management of capital deployed in trading, costs and taxes, and management of short-term borrowings.

The fourth requirement is buying the right kind of insurance. The need for insurance for life, health or general uses may not be felt by this group of young earners. They may see limited merit in term insurance that repays nothing; they may be confident about their health to seek cover; and they may not have too many possessions to care about general insurance.

However, they may still be a favoured catch for insurance agents, who can sell products to them by merely pushing tax savings. A rupee saved in tax is too precious for this segment to ignore. They need professional advice to use insurance to save on unexpected future expenses and to obtain low-cost cover.

They also need to be taken through the math of tax saved, returns earned, and costs incurred, if they pick up too much insurance that is tough to sustain. They also need to see how they can manage unexpected expenses better if they buy insurance.

There is a large audience that is spending, not saving; taking loans, not making investments; and choosing products without professional help. This group needs financial planners the most.