Everyone must have heard the mantra of ‘health is wealth’, but we should also keep in mind that ‘right management of wealth’ is also necessary for better health.
World Health Day, April 7, 2022: We all must have heard this phrase often said to emphasize the importance of good health – ‘Health is wealth’. But at the same time we should also keep in mind that ‘correct management of money’ is equally important for better physical and mental health. When we say this, we do not mean only that better health care can be done with money. Our aim is to draw attention to the fact that good financial planning can also prove to be helpful in improving our health. Let us understand how this can happen.
Stress has a bad effect on health
According to a recent study by Statista, financial instability was the second most important cause of stress among the people of India during the year 2020, after the fear of the COVID epidemic and the health problems associated with it. About 27 percent of the respondents cited financial instability as a major reason for stress.
Proper financial planning can reduce stress
If we do proper financial planning then stress can be reduced. Obviously, the reduction can have a good effect on health. For example, the worry about the education of children and planning for marriage, ensuring our retirement and securing the future of the family in the event of death keeps running in our mind. Achieving these goals can help reduce stress for the future.
Like medical test, financial test is also necessary
Just as the medical tests conducted from time to time tell us how healthy we are, in the same way, it is also necessary to undergo a financial test, so that we can get accurate information about our financial health and we can improve our financial condition in time. to take measures. Let us understand how we can do this financial test. For this we have to consider these ratios:
Savings Ratio – This is the percentage of savings compared to your gross income. The higher the ratio, the better. Any percentage over 30 percent is considered good.
Liquidity Ratio – This is an indication of how liquid your money is to deal with an emergency. It is money deposited in savings account, cash available in hand and other liquid assets. The ideal liquidity ratio is 15 per cent to meet any emergency.
Debt Asset Ratio – Tells you whether you have borrowed more or not. An ideal ratio is around 50 percent. That is, the total debt should not exceed 50 percent of your assets.
Debt Repayment Ratio – If this ratio is more than 40 percent then your financial condition is bad. This ratio is calculated on the basis of your monthly debt liability like EMI and credit card payments vis–vis your income.
After knowing about these ratios which tell the condition of financial health, now let us now know about some long term measures. With the help of which we can reduce the financial stress by achieving our long term goal.
have insurance
Most of us do not have insurance cover. This situation makes our family weak in case of any untoward incident. Adequate life insurance can help the family to maintain their standard of living and meet any debt obligations. This also ensures that you do not have to compromise on your future goals.
There are many ways to find out how much life insurance one should have, but a simple rule is that your life cover should be at least 10 to 15 times your annual income. The second part of insurance is health insurance. Due to the rising cost of medical treatment, it is imperative that you get your own health insurance in addition to any health insurance that you get from your employer. A family floater plan of Rs 10 lakh is generally useful.
planning for children’s education
It is very important to do financial planning for your children’s education too, so that when the time comes, you can give them the best possible education. Whether it is in India or abroad, it is not possible to meet the rising cost of higher education without proper financial planning. In this case, investing a fixed amount every month to meet your set goal is very beneficial. For example, if you need Rs 25 lakh in 15 years for higher education of your children, then you have to start investing Rs 15,000 from today itself.
retirement planning
The era of assured pension schemes from the employer is now getting left behind. In today’s era, for most people, it is their own responsibility to make arrangements after retirement. Post retirement expenses, if not planned in advance, can be a major reason for increasing stress as one gets older. To prepare your retirement plan, estimate the amount you will need for your monthly expenses post retirement and start investing for it immediately.
Through proper financial planning, you may not be able to completely eliminate the uncertainty of the future, but by overcoming it to some extent, you can definitely reduce the stress of your mind. Which can have a good effect on the health of you and your family. Therefore, on the occasion of World Health Day, let us also focus on securing our financial health for a healthy life.
(Article : Vikas Singhania, CEO, TradeSmart)