Build Financial Resilience to Reduce Financial Stress

Many of us grapple with financial stress at some time or the other. Of course, the reasons and the level of stress could be different depending upon how we handle our finances. Some of the reasons why we may face f inancial stress are: not having enough money to invest, delay in start of investment process, falling into a debt trap, being unprepared to handle financial emergencies, and not doing enough to create the required corpus for goals like children’s education and retirement.  [EasyDNNnews:PaidContentStart]

Whatever be the reasons, it is a proven fact that financial stress impacts our physical and mental health in adverse ways and often results in low esteem, stress in relationships, and a feeling of guilt. These effects can be both short-term and long-term. T hankfully, such situations can be avoided by following certain investing principles and being disciplined in savings and investing. Here’s what can cause financial stress during different phases of your lives and how to avoid these situations.

Early working years : During this stage, inability to keep a balance between spending and saving can be a majoer reason for financial stress. The freedom to take financial decisions often results in indiscreet use of credit cards, which puts young people into a debt trap. There are also instances wherein a significant part of post-Tax income is used for paying housing loan EMI, leaving little for other goals or needs. While the use of credit card in itself is not a financial stressor, the negative effects of indiscriminate use are quite a few and usually grow as time goes on.

Mid-career : This is an important stage in one’s financial life as the money is required for children’s education and marriage, repaying the home loan, and to increase the contributions towards retirement corpus. Remember, the impact of delay in investment process begins to show at this stage and that can be quite unnerving. Similarly, not taking inflation into account while investing for children’s education as well as retirement planning can leave a big gap between what is required and what one is able to accumulate.

Retirement : Each one of us dreams of leading a comfortable retired life. Unfortunately, not many plan for it in the right manner as we either end up investing conservatively or delaying our investment process or both. The anxiety of outliving retirement savings can cause serious financial stress. Besides, the widening gap between income and ever-increasing expenses can be quite stressful financially as one has to compromise at an important stage of one’s life.

Here is how you can eliminate or reduce the financial stress:

• Budgeting - Budgeting is the key to bringing discipline in money management process. It helps in curtailing unnecessary expenses and saving some money on a regular basis. It also brings in a discipline in your investment process. Simply put, creating a balance between spending and savings goes a long way in avoiding the debt trap and eventually reducing financial stress.
• Creating an emergency fund - An emergency fund should be an integral part of your risk management process as it helps in tackling situations that may arise on account of job loss, medical emergency or for some other reason. In other words, knowing that resources are available to tackle any f inancial emergency without disturbing your disciplined investment process can reduce, if not eliminate, any financial stress.
• Planning for investment - Having an investment plan in place is important as a directionless investment process creates uncertainty and that can be a major cause for financial stress. The feeling of being in control of investment process can keep you happy, both financially as well as emotionally.
• Taking help of an expert - The complexities in investment process and the vagaries of the markets can be incredibly stressful. An advisor can help in keeping emotions away from your decision-making process and reduce the financial stress by explaining different situations and keeping investments on track through your defined time horizon.

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]