Here are four tips that can give you peace of mind from a financial perspective, regardless of how old you are. Let’s get started?
With the fast-paced world we live in, stress can and is certainly taking its toll on young adults all across the country. The pressure to ‘fit in’, to get good grades, land well-paying jobs, adhere to societal norms, among other things, all play a role in determining the mental state of adolescents and the youth of today.
The Pandemic Strikes
The current pandemic has further made things worse. Social interactions have reduced to a bare minimum. And most of us are cooped up in our houses – some with our families, some with friends and some all by ourselves. There has certainly been a drastic change in our lifestyles since mid-March. And such a change isn’t easy to adapt to. The rising number of depression and suicide cases have certainly been an indication of how important it is for us to care for our mental well-being, along with our physical well-being.
While stressors can come in any form, we often fail to consider financial stress as one. Today, allow us to tell you that financial stress is REAL. Since the beginning of the COVID-19 pandemic, we’ve seem a great number of employees losing their jobs, practically being cut out of their only means of living. And the last six months hasn’t been an easy journey for them. Although there was respite from having to pay one’s monthly dues, we should all understand that managing a household without an income isn’t an easy one. Especially if we aren’t prepared for it.
Believe it or not, but one of the major contributing factors towards the deterioration of mental health is financial management. Or rather the lack of it. Money woes have long been a major reason for the increase in stress levels, especially among adults in India.
Additional Reading: Tips To A Financially Peaceful Retirement
Simple Tips For Financial Peace Of Mind
We’re going to do our bit by listing out four tips that can give you peace of mind from a financial perspective, regardless of how old you are. So let’s get started:
1 – Pay Off Outstanding Debts
Paying off debts is certainly easier said than done. By tackling your outstanding dues in a systematic manner, you could be debt-free sooner than you think. Credit Card debt, for example, can be a real drain on your mental and financial faculties. Since Credit Card debt comes with massive interest charges, it would certainly be wise to pay it off as quickly as possible.
Making the minimum payment every month won’t help. If you can’t pay the entire outstanding amount in one go, try to divert a sizeable chunk of your income towards your outstanding balance. This will subsequently reduce the amount you have to pay in interest every month.
Alternatively, if you have huge outstanding dues on multiple Credit Cards, you could consolidate your debt by taking out a Personal Loan. It might sound strange to pay off one type of debt with another. However, a Personal Loan comes with a much lower interest rate and favourable repayment tenures. This will help you systematically reduce your debt on a monthly basis.
Additional Reading: Ten-10-A-Ten Offers – Personal Loan
2 – Start Saving
Have you started saving money?
No matter what stage of life you’re currently in, there’s no better time than the present to start saving. Set aside a portion of your monthly income and divert it into a Recurring Deposit or a Fixed Deposit. You’ll earn more interest in these avenues than a Savings Account.
Set up an auto-debit from your account that will divert funds towards your savings every month. This help you develop a savings habit. And it will go a long way towards helping you build a financial safety net to fall back on in case of emergencies.
Additional Reading: A Comprehensive Guide On How To Increase Savings Over Time
3 – Draw Up A Monthly Budget
More often than not we end up scrambling at the end of every month because our expenses have outstripped our income. This can cause undue stress, especially if the rent is due or if you have a bunch of bills to pay.
By drawing up a monthly budget, you can allocate how much of your income goes towards your savings and your expenses. For instance, by utilising the 50/30/20 rule of budgeting, you can go a long way towards attaining financial peace of mind on a monthly basis.
The 50/30/20 rule states that you should divert 20% of your income towards savings and debt payments. 30% can cater to your ‘wants’. 50% of your income should go towards necessary expenses, such as groceries, household costs etc. By sticking strictly to this plan, you will soon find yourself with enough to tide you over every month and with something left in the kitty as well.
Additional Reading: 6 Incredibly Smart Ways To Maintain A Watertight Budget
4 – Get Insured
Many people, especially the younger generation, tend to overlook the importance of insurance. The general tendency among young adults is to assume that they are practically invincible. But taking out Life Insurance or Health Insurance policies can be of great benefit to them as well as their families.
A Life Insurance policy, for example, can meet the policyholder’s family’s financial needs in the unfortunate event of his/her demise. This can be especially beneficial if he or she is the sole breadwinner in the family.
A good Health Insurance policy can also come in handy, especially in case of medical emergencies or hospitalisation that would usually cost vast sums of money. A Health Insurance policy can keep you from diving into or emptying out your savings to pay for such instances.
Additional Reading: Everything You Need To Know About Life Insurance
There you have it! By following these tips you should be in a better position to tackle almost anything life throws at you, from a financial standpoint at least. Remember, prevention is always better than cure. And if you need any help finding a financial product that complements your financial profile, just hit the link below and allow BankBazaar to serve you 🙂