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Financial Wellness: Managing your finances and mental health.

GOQii India Fit Report, 22-23 included a survey known as “Game-Changing Health & Wellbeing Revolution in India”. According to this survey,

  • a staggering 24 per cent of Indians are struggling with stress.

  • the current workplace environment and financial instability are the top two major factors affecting stress levels among Indians.

  • As many as 17 per cent of Indians are stressed due to financial instability.

What is Financial Wellness?

When your financial situation is under your control, and you have a positive and healthy relationship with money, you can be considered financially well and healthy. Financial wellness covers a variety of aspects such as budgeting, saving, investing, and managing debt. In other words, when you possess the required knowledge, skills and resources to make informed financial decisions, you ensure financial security and peace of mind for yourself and accomplish financial wellness.

What is Mental Health?

Mental Health is all about nurturing a healthy mind and finding inner peace. Your emotional and psychological well-being has a direct impact on your mental wellness which can be taken care of by practicing self-care, managing stress, seeking support when needed, and cultivating positive thoughts and emotions. Your mental health revolves around several factors like emotional resilience, self-esteem, and the ability to cope with life's challenges.

Are Financial Wellness and Mental Health interdependent?

Financial Wellness and Mental Health are interdependent as they create a paramount impact on each other.

  • When you are financially well, which includes being debt free and having an emergency fund and significant savings, yourfinancial stress levels gradually decrease, and you begin to experience a sense of financial security.

  • On the other hand, prioritising and taking good care of your mental health can lead to better financial decision-making, enhanced productivity, and a positive relationship with money, eventually contributing to your mental wellness.

Taking care of both aspects together creates a harmonious balance in your life.

The financial environment is dynamic and ever-changing. With growing competition, financial stress has become a common experience that many people face. As you grow up, it is normal to undergo this experience when you have responsibilities and financial obligations to take care of, such as paying bills or managing debt. When you don’t have enough money, the pressure to save money or making an investment in the early years can give rise to the fear of not having enough and lead to stress. Over time, these concerns can take a toll on your mental health.

Let’s have a look at the most common financial factors or situations that can be heavy on your mental health.

  1. Rising Prices of the things that we need and use on an everyday basis makes it difficult for us to manage our money and strain our wallets. We can be uncertain about our ability to afford things and we begin feeling the pressure to make ends meet.

  2. Debt trapfeels like falling into a maze of financial stress with no gates to escape and can make you hopeless at times.

  3. The fear of losing your job or instability in your employment can cause uncertainty and disappointment in your mind, thereby adversely affecting your mental health. You may also experience helplessness and lack of motivation.

  4. Lack of understanding and knowledge about management of finance and wealthcan make the financial decision-makingprocess even more challenging and can push you into making such decisions hastily. As a result, you may end up in financially distressed situations that may occur due to overspending, debt accumulation, or inadequate savings.

  5. Absence of sufficient savings or an emergency fundto dealwith emergencies or unexpected expenses can put you in a tough spot. Inadequate savings can further increase your dependence on debt to meetsuch unexpected costs or expenses.

  6. Financial pressure from family or society can create stress and mental strain. When we feel obligated to meet societal expectations or provide financial support to our family, it can put a lot of pressure on us to earn more and constantly meet the growing expenses.

What steps can be taken to effectively manage situations that are financially stressful and make it difficult for us to maintain good mental health?

Let’s take a glance!

1. Set Clear Financial Goals

Your financial goals must be well defined and provide you with a purpose and direction in your financial journey. For example, saving money to buy a house, building a significant corpus for your retirement, or paying off your debts, are a few common yet meaningful goals. Remember, every individual has unique financial goals, so you must devote time to identifyyour future needs and set your goals accordingly.

2. Create a Budget

A budget is an essential prerequisite if you aim to track your income and expenses. You must be aware of the inflows and outflows that take place within a period to make informed decisions. This is where preparing a budget helps you. Moreover, when you prioritiseyour spending based on your budget, your wallet is less strained and more thankful for the significant savings!

Here is a step-by-step guide to start budgeting - How To Create A Budget And Stick To It

3. Practice Mindful Spending

When it comes to money related decisions, always maintain a state of calm and be actively present in the moment. For example, while making a large expense, make yourself fully aware about the consequences and impact that expense will have on your future financial situation. Your decision to make an expensive purchase must also align with your financial needs and values. This allows you to cultivate a deeper sense of fulfilment

4. Try to save money on everyday expenses

We all have a list of regular expenses. Sometimes, these expenses can be unavoidable as they include our basic necessities. So, even if we cannot avoid such expenses, we can try to save a significant amount on these expenses. Small savings add up and help when we need them the most. There are many ways in which you can build a a significant amount by saving money.

You would love the practical tips in this article - Smart ways to save money on everyday expenses

5. Build an Emergency Fund

How would you feel when yourun short of funds needed to cover the cost of an unexpected expense during an emergency? This situation will certainly push you into using your credit cards or seeking help from others. However, when you set aside funds for such unexpected expenses, you build a safety net for your future financial emergencies. When you feelyou’re ready to face financial emergencies, you live your life with greater peace of mind.

Check out this guide to build an Emergency Fund - Emergency Fund: The foundation towards financial freedom

6. Seek Professional Guidance

Financial stress can be mentally exhausting and has the potential to divert your attention from other essential activities in life. However, every problem has a solution. You need to address your financial stress and burden with a strategic plan. You do not need to figure this all out on your own. Instead, it is highly recommended to seek professional guidance from financial experts in these tough situations as they may help you find your way back to financial and mental peace.

7. Minimise & Manage Debt

Firstly, it is important to not use debt to meet your expenses in an impulsive manner. Try to keep your debt as low as possible. Remember to stay punctual in repayment of your loans. Credit can be an attractive option to make payments, however, the bill is ultimately on you. So, make sure you use debt when you need it the most.

8.Automate Bill Payments

If you are someone who is not good at keeping track of due dates, then you must use present-day technology for your convenience. You can automate your bill payments to avoid any late fees and make timely repayments. All you need is funds in your bank accountas you approach the repayment date! Many utility payment applications like Paytm and PhonePe allow you toautomate your bill payments and make this process hassle free for you.

9.Regularly Review Your Finances

Every month can be different for you when it comes to finance.When an unexpected expense comes, and you don’t have funds to meet it despite following a financial plan, you get a reminder about the need toimprove your financial plan. So, instead of waiting for that reminder, you must actively review and revise your finances regularly, to be able to keep up with any changes happening in your life. This allows you to evaluate your progress and keep a check on your financial health.

10. Practice self-care and celebrate small wins.

If you were able to save a few more thousands than the previous month, celebrate it. If you just cleared off your loan that you’ve been repaying for the past five years, celebrate it. Acknowledge and celebrate your financial accomplishments, no matter how small.If you are going through a tough time financially, try to engage your yourself in anything that does not involve excessive spending. For example, you can go for a walk, play your favourite sport or spend quality time with your friends and family to take care of your mental health.

Final Thoughts

Financial wellness is not merely about numbers and bank balances. It is also about your mental peace throughout your financial journey. It is about maintaining a healthy relationship with money by eliminating worries related to savings, debt and overspending. The financial landscape is dynamic. To keep up with the changes, we must enhance our productivity and skills to seek better opportunities. Remember, where there is a will, there is a way! Stay hopeful and remain willing to face your financial challenges and you will win over them soon!

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