Why personal finances are an important aspect

“It was the darkest phase of my life. Beyond work, I would simply spend all my waking hours lying in my room alone staring at the ceiling or scrolling mindlessly through social media. This started after my father’s sudden demise following which my family found itself drowning under a mountain of debt. I was not earning enough, my family had little financial buffer. The situation was so dire that I plunged completely into an emotional abyss,” recalls 32-year-ol Mamata Sinha (name changed).Sinha was diagnosed with clinical depression. Her story of survival is inspiring but it has an important takeaway that is seldom acknowledged in the realm of discussions on mental health. “I was fortunate to have received appropriate medical attention but I cannot deny that I was only able to get out of that black hole once my financial troubles had ebbed significantly. My experience made me realise that our overall well being is so intimately connected to our financial health and more so in the case of women but the link between the two is rarely acknowledged,” Sinha says.While Sinha’s trigger was a financial exigency itself, the link between financial stress, money and gender is intricate and runs far deeper than people realise. Women still have a long way to go when it comes to attaining financial independence and unshackling themselves beyond the confines of traditional gender roles. Those who do manage to have their own sources of income have to battle the gender pay gap. All of these have negative trickle-down effects on the power balance between women and men in social structures which impacts the quality of their lives and can magnify psychological distress.According to the World Health Organisation, “Gender determines the differential power and control men and women have over the socioeconomic determinants of their mental health and lives, their social position, status and treatment in society and their susceptibility and exposure to specific mental health risks. Gender differences occur particularly in the rates of common mental disorders – depression, anxiety and somatic complaints. These disorders, in which women predominate, affect approximately 1 in 3 people in the community and constitute a serious public health problem.”

Aditya Birla Sun Life Mutual Fund has started a special initiative called For Her that focuses on financial inclusion of women and intends to provide them avenues for financial security.Dr Era Dutta, consultant psychiatrist at Mind Wellness Clinic, Kolkata, explains, “The 21st century woman is synonymous with the ‘want’ and ‘need’ to be financially independent. Financial matters play a major role in boosting the mental health of women as healthy finances makes them feel respected in society and in control over their lives. It also gives them the freedom to explore more options to explore in terms of work, relationships, the ability to leave an abusive relationship and access better healthcare facilities. Leading studies have time and again shown that there is a cyclical correlation between money, anxiety and depression. Women have often been subjected to differential pay systems even in first world countries.”If the gender gap makes it harder for women to build a solid financial safety net for themselves and their families, the lack of financial literacy and deeply entrenched perceptions of women being incapable of managing finances causes many women to stay dependent on their husbands for other male members of the family. Sinha says, “Even when I started earning more money it didn’t put an end to my financial troubles because I didn’t know how to save and invest it as per my needs and risk-taking abilities. As is the case with most people of my generation in India, money management skills were never deemed worthy enough of being imparted, more so because of my gender. It took me a lot of hits and misses before my investments started giving me adequate returns and I was able to put an end to all the financial difficulties my family and I were going through.”When Sinha started her investment journey, she was sold by the idea of investing only in traditional risk-free instruments but after some time she realised that she would have to diversify and take calculated risks for her investments to generate optimum returns. “The journey of learning, unlearning and relearning the tenets of judicious investment did a lot to allay my stress. I changed my preferences for asset classes – from solely relying on fixed deposits and post office schemes, I started taking baby steps towards dabbling with mutual funds and my portfolio performance improved over a couple of months. I could choose from a plethora of funds for different objectives with varying risk levels and liquidity was not a concern either because unlike fixed income instruments, there was no lock-in period,” she says.Kaanan Ladha, CEO of Invest Aaj for Kal says, “Proper financial management can prevent stress and for that the right investment strategies are sacrosanct. Once you are financially aware and know our suitability you can start investing accordingly and build a portfolio. In the game of investments, the most important thing is consistency and the best way to start a consistent investment is SIP. Consistency helps in compounding and compounding is super powerful in the long term – for example, 10% growth in 25 years wont amount to 250%, but it makes you 985%. You earn 735% extra purely because of compounding. Small investment over time helps you build sufficient capital and this can improve your financial situation and eliminate your monetary worries.”Key takeaways1. Do not hesitate to seek medical aid and counseling if you feel that your mental health is declining.2. Should you feel overwhelmed by financial problems, seek advice from professionals or relegate the task of money management to someone you trust for a while.3.It is important to work out the tenets of judicious investment to reduce stress and anxiety. If need be, change your preferences in investment for asset classes.4. In the game of investments, the most important thing is consistency and the best way to start a consistent investment is SIP.This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.

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