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Know If Your Finances are Taking Over Your Mental Health

IndianMoney.com Research Team | Posted On Friday, October 25,2019, 05:31 PM

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Know If Your Finances are Taking Over Your Mental Health

 

 

Research shows mental health and money are often linked to one another. A vast majority of people suffers from depression and anxiety due to debt or money management problems. Money problems can affect your social life, your relationships and your profession which consequently affects your mental health. For example, you may feel anxious if you are in debt. You may feel stressed about your future if you don’t have enough savings.

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Know If Your Finances are Taking Over Your Mental Health

Try these simple steps to keep your money problems at bay and retain your peace of mind.

Differentiate Between Wants and Needs:

If you are striving for financial independence then the first thing you must do is to set yourself free from your wants. Though it is impossible to have no wants at all it is not impossible. And so you must here try to determine the wants that are originally your needs. Therefore you must draw a line between your needs and wants. For example, the want of owning your own house is also a need but a want to own a luxury car is not necessarily a need. So you must segregate between your wants and your needs to make your financial life easier.

See Also: Health Insurance Plans

Prioritise Saving Over Spending:

Most of the young professionals overspend their income and face cash crunch at a later point in time. This should not be the case. Prioritise saving rather than spending when you start earning. Financial experts believe one should save at least 30 to 40% of the monthly income. Chalk out a savings plan and stick to it. However, save a major portion of the money at the beginning of the month to restrict your expenditures. This way you can limit your expenses as you are left with the remaining amount.

  • Delegate an amount every month towards each of your goals
  • Your savings should be in line with your growing income

Prepare for Unexpected Expenses:

You must always stay prepared for health and life risks. Even though you are financially prepared, do invest a small portion in health insurance and term insurance. Health insurance will take care of your medical emergencies and term insurance will take care of your loved ones in case of your sudden demise. Preparing yourself for emergencies in advance will help your financial life to remain on track.

Given below are some ways you can prepare yourself to counter emergencies:

  • Save money for emergencies. A contingency fund will help you cover unexpected expenses and will support you through temporary unemployment.
  • Buy a comprehensive life insurance cover that promises a sum assured which is 10 times your annual income
  • Buy a family floater health cover to ensure your loved ones from health emergencies
  • Buy an accidental and disability cover.

See Also: The A - Z of Health Insurance

Get Rid of Your Debts:

With the introduction of instant loans and credit cards, people have more access credit. While these can be great option to help you in urgent situations, they can even lead to some impulsive expenditure. Therefore it is important to use these financial instruments with restraint.

Unnecessary spending may lead you to massive debt. You may end up in a debt trap if you cannot pay your bills on time. You credit card interest will accrue and you will end up paying back much more than what you have borrowed. This is the reason our elders always advises us to save money. If you want financial independence then you must have minimum debts. Here are some ways that will ensure you have minimum debts if you follow them:

  • Don’t use your credit card if you cannot pay back your debts
  • Don’t take a personal loan for unnecessary purchases
  • Make sure you EMIs account for not more than 40% of your income
  • Pay your loan EMIs and credit card dues on time.

See Also: Types of Health Insurance Plans in India

Stay Away From Fraudulent Investment Schemes:

You will come across various investment schemes that will promise you double returns within a short term. Such schemes are too good to be true. Before you invest in such schemes, make sure to do your research and invest based on your risk appetite.

Here are few tips that can help you get the best deal:

  • Don’t invest in schemes that promise astounding returns.
  • Before investing in products like equities, mutual funds, unit-linked schemes evaluate your risk-bearing capacity and understand the terms clearly.
  • There is no way you can double your money within a year. So stay away from such schemes
  • Make online payments through encrypted websites only.

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