Financial stress is a significant concern in India, affecting a large portion of the population. A survey conducted between May and September 2022 revealed that approximately 69% of Indian households experience financial insecurity. The average income for an Indian family of 4.2 persons is ₹23,000 per month, with over 46% of families earning less than ₹15,000 monthly. Despite 70% of households engaging in financial savings, a substantial portion remains financially vulnerable.
These findings underscore the profound connection between financial health and mental well-being in India, mirroring trends observed in other countries.
Factors Contributing to Financial Stress
Financial stress has a wide range of causes. Sometimes it will probably be temporary, like when we lose our jobs or incur unforeseen but short-term costs. A new employment and careful budgeting might ease the worry in these situations. The increasing number of people and families who struggle to make ends meet even while working is one example of how stress can occasionally be more chronic and entrenched in systemic injustices.
Regardless of the cause, the anxiety of not knowing if we can pay our bills—both for ourselves and occasionally for others—may seriously impair our mental well-being. Everyone is impacted by financial difficulties or stress, but young people may find it particularly difficult as they lack the financial management skills of older generations. However, it should be highlighted that healthy young people usually have years of potential training and new skill acquisition ahead of them to help turn the tide, whereas older people frequently lack the physical, mental, or experiential capacity to work.
The Consequences of Financial Stress
Mental health issues and financial stress can exacerbate one another. Untreated stress has the potential to worsen, just like any other stress. Stress related to money can harm mental health, and poor mental health can make money management more difficult. Experiencing significant financial stress can lead to emotional or physical problems such as:
- Harm to one's sense of self-worth, guilt, rage, anxiety, or hopelessness
- Lack of energy, difficulty sleeping, or weight change
- Having trouble keeping up a social life or sustaining relationships
- Abuse of substances
- Suicidal ideas and action
Suicide is a severe reaction to financial stress and is always caused by a variety of circumstances, however financial stress can occasionally play a role. Depression and anxiety, particularly when there is no obvious way to resolve financial difficulties, are more frequent outcomes of financial stress. It is crucial to determine the cause of the stress and, whenever feasible, switch to problem-solving mode. While it's reasonable to want to avoid the problem in order to reduce the stress, doing so rarely actually helps. Furthermore, avoiding difficult situations might exacerbate financial stress. It's far more beneficial to switch to active issue solving mode and make use of your available resources.
Here are some tips how to get started:
Stay Connected with Friends and Family
Financial difficulties can make us desire to distance ourselves from the situation and downplay its difficulties. It can be difficult to even acknowledge that we need support if we lack the funds to spend on socialising and/or feel ashamed or embarrassed about our circumstances. However, other people are our greatest resource. Having someone nearby to offer emotional support might sometimes make us feel less isolated. In other circumstances, especially if they have experienced a similar circumstance previously, friends and family may be able to offer you tactical and useful real-world advice or assist you in solving problems. Given the prevalence of financial stress, it's very probable that someone in your social circle has dealt with a similar circumstance in the past and may provide suggestions or at least temporary support.
Keep Track and Manage Your Finances
Tracking and budgeting your expenses is one of the best ways to cut down on spending and understand where your money is going. Most people are unaware of how much they spend on particular items, and it's always surprising where we spend our money. Here are some strategies for monitoring and controlling your money:
- You can use your phone to keep track, open a spreadsheet, or download a financial tracking app. Whatever makes sense to you.
- Make a spending plan and follow it. Establishing a daily, weekly, or monthly budget will help you do this. While some people may choose to have a monthly budget that they must stick to, others may prefer to divide their budget into smaller areas. Try different things and find what suits you best. When it comes to budget reduction, be both ambitious and practical. Keep in mind that while change won't happen right away, you will eventually notice changes if you persevere.
- You may frequently set up an automatic debit from your account to transfer money to a savings account or apply to a bill as soon as you're paid if you need to save money or make monthly payments. It can be much simpler to conserve money and pay your bills if you do not include these immediate and automated debits in your monthly budget for other spending.
- Establish a framework or strategy that will help you stay under your spending limit, and remember that there is no one-size-fits-all solution. Using a debit card and often reviewing online records may make it simpler for some people to keep tabs on their spending and adhere to a budget. Others might find it simpler to stick to utilising only cash.
- Determine the factors that lead to impulsive buying. It's surprisingly simple to pick up little items you don't need, so making sure you've recorded and budgeted for them will help you cut down on wasteful spending.
- Acknowledge the influence of little adjustments. Making the decision to establish a new spending budget can be daunting, particularly if you only consider significant adjustments. However, over time, even adjustments, such as cancelling one online subscription, can have a significant impact.
You’re Not Alone, Seek Expert Financial Guidance
It's helpful to know that there are organizations that offer financial guidance and other services when you're dealing with ongoing or structural issues. You can also ask for assistance from your own bank. Since it is in their best interest to assist you, banks are a good resource for free financial advice and counselling. If you want to seek professional help regarding your overdue loans, you can speak with FREED’s financial counsellor—free of cost. They can also guide you through the loan settlement process, helping you resolve your debts more effectively. The majority of libraries provide a wealth of material about financial planning, and books are another excellent resource. Additionally, you can Google "best books for financial advice" to explore valuable recommendations.