Got Money Phobia? How should we deal with it !!

Money and personal finance matters are very important however many of us fear in dealing with them and are clueless at the time of emergency, so let’s discuss what are the common fear most of us have and how can we overcome from these fears.

1. Stock Market is very risky: I will lose my money

Many of us feel that stock market is a very speculative place and there are very high chances of losing money. Those who have lost money in past or have no knowledge/experience have very high feeling about losing money in the market.

So, How to deal with it:  If you don’t have much knowledge then it is better to invest via mutual funds not directly through stocks. Still if you want to invest in stocks, it is better to first gain knowledge of the subject or take the help of a financial adviser. Also remember not to follow tips from anyone blindly. It is always wise to invest for the long term and not be influenced by short-term flux or churning.

2. I don’t have enough money to face a Medical Emergency

Many of us fear that if there is some serious medical issue in family, they may have to spend all their money to deal with it. It is actually true to some extent looking at the high cost of hospitalisation and medical care and if someone have critical illnesses or accidental injuries.

So, How to deal with it: Health Insurance is the answer. We all should have a basic health plan of, say, ₹5 lakh and get a bigger top-up plan of, say, ₹20 lakh with a deductible of ₹5 lakh. This will be cheaper than a single cover of ₹25 lakh. We can also create an emergency fund along with the basic health plan to cover the other expenses. It’s also important to buy critical illness and accident disability insurance plans which comes at small premiums and cover only those cases.

3. I won’t be self-dependent after my Retirement

More than half of Indians fear they will not be able to support themselves after their retirement, with 70% people expecting their children to support them, says one study.

So, How to deal with it: Proper retirement planning is must for every person. We should start saving more of our income by cutting down on non-essential expenses. Further we should ensure to invest in the right avenues so that our corpus is growing and able to beat inflation over the longer duration. It is always wise to take the help of a financial adviser. Also, we can explore additional sources of income to supplement our existing income.

4. I am in a Debt trap

This is a world of EMI and Credit cards. We keep on buying things through EMIs, sometime even if that is not required. Upgrading to a new IPhone or going for an exotic foreign vacation so as to put the pictures on Facebook/Instagram is not very uncommon now days. This temptation to buy on credit often results in several loans and falling into a debt trap.

So, How to deal with it: Be a sensible buyer is the KEY. Everything in the market is for us only, but it does not means that we should be buying anything or everything. We need to ensure that total EMIs should not be more than 50% of our income. If we already have lot of loans, a proper plan should be prepared to repay them, starting with the most expensive ones like a credit card bills or personal loan, and moving to car and education loans. Few Loans like home loan and education loans have tax benefits so we can continue however if the rates are high or we have capacity we can prepay the same.

5. I will be fired from my Job

In the current competitive market fear of losing job is very common, technology is replacing humans and many people become outdated/redundant in this kind of environment. Economic recession, cost cutting are also other reasons for people fearing loss of job. So If you are worried it may be due to one or more of these indicators you may have witnessed.

So, How to deal with it: we should always have emergency corpus to meet our regular monthly expenses in case of loss of jobs. We can have that corpus for 3 months to 1 year depending upon which industry we are working with.  Further we should keep on updating our skills and have knowledge about what is going on in our industries and sector so as to be ready to face these eventualities.

Finally the simplest way to manage these kind of financial fears is to be organised and prepare well for events and eventualities. The help of experts is always better if we don’t have much understanding of the things.