While the focus of this year’s World Mental Health Day is on raising awareness about mental health among young adults, we’re doing our bit by listing out four financial tips that can put your mind at ease.
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.
World Mental Health Day this year focuses on raising awareness on how to look after the mental health of young adults and to help parents and other authoritative figures to get more involved in preventing mental distress at an early stage.
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One of the 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 young earners in India.
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:
Pay Off Outstanding Debts
While 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 and ensure that you divert a sizeable chunk of your income towards reducing 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. While it might sound strange to pay off one type of debt with another, a Personal Loan comes with a much lower interest rate and favourable repayment tenures, which will help you systematically reduce your debt on a monthly basis.
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No matter what stage of life you’re currently in, if you haven’t started saving, then there’s no better time than the present to do so. Set aside a portion of your monthly income and divert it into a Recurring Deposit or a Fixed Deposit. This works better than just letting your money sit idle in a Savings Account since you will earn interest on the money you save.
Set up an auto-debit from your account that will divert funds towards your savings every month. Not only will this help you develop a savings habit, it will go a long way towards helping you build a financial safety net to fall back on in case of emergencies.
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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% on your ‘wants’ and 50% on 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.
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Many people, especially the younger generation, tend to overlook the importance of insurance. While the general tendency among young adults is to assume that they are practically invincible, 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.
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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.