Smartest investment and life plans in UAE

Is Your Mental Health Being Affected By Your Finances?

By PolicyBazaar
  | Published: 25 January 2020 | Last Updated On: 19 January 2021

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Smartest investment and life plans in UAE

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In today’s age, it has become common to stress on our finances. It has also become a popular topic for conversations. While we try our best to laugh it off, the financial stress in one’s mind tends to have an alarming effect on his/her mental health.

Be it anxiety or insomnia or even social detachment, financial stress tends to take control of the life of the person affected.

If you are someone who tends to feel bound by money issues every now and then, it could be because of poor financial management, and weak financial planning in UAE. Money problems have often been said to be the reason behind one’s deteriorating physical and mental health. Especially for people who are not very much in control of their expenses.

Majority of today’s population work so hard to earn money and build their wealth. Yet, most of them are unable to save enough to support themselves in the coming times. This often is the consequence of poor financial planning in UAE. If you manage your money in a proper manner, you will find yourself with a peace of mind and no stress.

Here is a thread that will help you break free from any mental stress caused because of your finances. Follow the steps below in order to be at ease with your money problems.

Separate Your Wants From Your Needs

The first step to attaining your desired financial independence is to achieve freedom from your wants. You should have a clearly defined boundary between your needs and your wants. This helps in simplifying your finances.

Choose Saving Over Spending

Once you have started earning, it is key to remember one thumb rule – give savings more importance as compared to spending right from the very first day. Make a savings plan for every month.

Most professionals for financial planning in UAE will suggest you save up at least 30% of your earnings. if you think 30% is too much, 20% can be a good starting point for you. It is best for you to keep aside your savings at the beginning of the month, this ensures that you do not end up spending your potential savings.

After keeping your savings aside, you should aim at restricting your expenses in order to keep them under the remaining budget.

Three things to keep in mind while planning your savings are:

  1. Allot specific savings towards each of your financial objectives.
  2. Over the course of time, as your income increases, your savings should increase as well.
  3. You should not turn back to your savings when you have exhausted your budget for your expenses.

Be Prepared for Unexpected Expenditures

No matter how perfect your financial planning in UAE is, if you have not prepared for any unexpected expenses, your plan is likely to end up as a failed one.

Therefore, it is essential to prepare for any financial emergencies that may arise well in advance so that you do not get off the path when it comes to your financial objectives.

Some things that can help you be prepared for any emergencies that may arise are:

  1. Set up an emergency fund that covers at least six months of your expected expenditure.
  2. You should prepare a backup by purchasing a comprehensive life insurance policy with a payout that is sufficient to sustain your current lifestyle.
  3. You should be certain about the health cover for your family in case any medical emergency arises.

Set Up Your Financial Objectives

One important concern for any investor while investing in any kind of investment instrument is the return. However, it is important to know that it is not just the return that matters. It is essential for any individual investor to have financial goals set up as a part of his/her financial planning in UAE.

For instance, someone may want to save up for a vacation, or someone may be saving towards his/her retirement. The key factor is to have defined financial goals so that you can attain them.

Some things to keep in mind so that you invest based on your objectives:

  1. You should aim to build a portfolio that is well diversified.
  2. You should choose your assets based on your time horizon, risk appetite, and financial goals.
  3. You should regularly review and rebalance your portfolio because as you cross milestones in life, your financial goals tend to change.

Pay off Your Debts

Many of us tend to overspend in a reckless manner, especially because of the ease of the numerous options available in the market for borrowing money. We often overlook the worry involved in paying off these debts.

Personal loans are approved quickly and the credit cards are easy to obtain. While the ease of these options is a good thing, you should be wise when using them otherwise you may end up in a crisis. Reckless spending can accumulate a huge outstanding amount that you will have difficulty to repay.

If you are on the path to becoming financially independent, you should keep your debts to the bare minimum.

Some tips to help you to get away from or out of debt:

  1. You should lay a fine line between your wants and your needs.
  2. You should use your credit cards or personal loans wisely, only for the things that are essential.
  3. Your monthly dues should be less than half of your monthly income.
  4. You should clear all your outstanding dues on a timely basis and avoid putting it off to next month. You should not fall for the minimum payment scheme offered by the providers.

Avoid Any Fraudulent Schemes

Before investing in any investment schemes, you should do in-depth research regarding the provider and evaluate the scheme with respect to your risk tolerance.

Few things to keep in mind:

  1. Do not be blindsided by schemes offering exceptionally great returns.
  2. Before investing in any instrument, evaluate their features clearly.
  3. You should be careful to make online transactions only via secured websites.

It is not rocket science to be away from all the financial worries. You just need to have healthy financial habits. You are sure to be at ease with money that is managed properly.