Importance of Financial Wellness and Mental Health
- AssetPlus
- 1 day ago
- 10 min read
The modern financial environment is certainly challenging. Economic insecurity, inflation, market volatility, and growing job instability have led to the creation of sustainable personal finance and wellness models. Financial wellness and mental health have become survival skills.
The financial wellness meaning set out by the U.S. Consumer Financial Protection Bureau is "the feeling of having financial security and financial freedom of choice, in the present and when considering the future." It is the capacity to service current debt, withstand financial shocks, and make informed money decisions.
However, money makers have their own set of pressures:
Erosion of purchasing power due to inflation, especially in India's urban areas.
Financial illiteracy results in inadequate investment returns.
Rising healthcare and education expenses.
Impulsive spending and emotional expenditure.
Financial wellness strengthens your portfolio and your state of mind. This guide presents 10 core money and mental well-being principles that help in financial stress management and encourage personal finance and wellness security.
Principle 1: Pay Yourself First
Creating a savings-first habit is one of the best ways to develop financial discipline. Start every month by saving first, not spending. This habit builds discipline and ensures you're prioritizing your future self.
T. Harv Eker stressed, "The single biggest difference between financial success and financial failure is how well you manage your money. It's simple: to master money, you must manage money."
This rule demands automation. Create Systematic Investment Plans (SIPs) or Recurring Deposits (RDs) to start as soon as your salary credit happens. Invest at least 20% of your post-tax income in building wealth.
How to do this effectively:
Automate SIPs using AssetPlus' FundFinder, which suggests the best schemes according to income, risk, and target.
Renegotiate contributions annually according to salary hikes.
Preserve savings as an automatic line item in your monthly budget.
For instance, if you earn ₹1,00,000 per month, invest ₹20,000 at the beginning of the month. Don't wait until the last moment. This approach generates momentum and insulates your wealth creation activity from lifestyle creep.
Principle 2: Spend Less Than You Earn
One of the most practical but often overlooked financial health tips is this: ‘Always spend less than you make.’ Although the concept seems simple, many professionals fail at lifestyle inflation.
This habit slowly depletes your capacity for saving and investing. Gadgets, flight upgrades, restaurant dining, and luxury subscriptions become acceptable post-promotion, but they water down long-term wealth generation unless regulated.
To combat this, develop a systematic budgeting model that focuses on savings and absolute needs, with a controlled portion set aside for lifestyle indulgences.
Optimum Income Allocation Table:
Monthly Income | Needs (50%) | Lifestyle (20–30%) | Savings & Investments (20–30%) |
₹75,000 | ₹37,500 | ₹15,000 – ₹22,500 | ₹15,000 – ₹22,500 |
₹1,00,000 | ₹50,000 | ₹20,000 – ₹30,000 | ₹20,000 – ₹30,000 |
₹1,25,000 | ₹62,500 | ₹25,000 – ₹37,500 | ₹25,000 – ₹37,500 |
Avoid confusing every pay rise with a lifestyle boost. Instead, practice delayed gratification and channel excess income into goal-specific investment vehicles.
Pro Tip: AssetPlus facilitates disciplined expenditure through real-time budget tracking, expense classification, and investment reminders. This is the importance of financial wellness: spending less, managing money, and maintaining mental well-being. Such practices alleviate stress from overspending and create a strong foundation for financial security.
Read More: 10 Hacks to Plan Personal Finance Like a PRO |
Principle 3: Let Your Money Work for You
Albert Einstein summarized, "Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it."
Saving alone is insufficient. Investing makes your money grow and accumulate over time, amassing wealth that exceeds inflation.
Here is the difference between saving and investing:
Parameter | Saving | Investing |
Purpose | Save Money | Grow Money |
Risk Level | Very low | Low-Moderate-High (based on instrument) |
Return Potential | 3% to 6% | 8% to 14% (long-term average for equities) |
Inflation Coverage | No | Yes |
Examples | Savings account, Fixed Deposit (FD) | Mutual Funds, Stocks, NPS, Real Estate |
Investment means putting your money into instruments such as equity mutual funds, NPS, and ETFs that return compounding over the long term.
For example, an SIP of ₹5,000 per month for 20 years at a 12% annual return will amount to over ₹50 lakh. The actual investment will be only ₹12 lakh.
Saving protects your capital. Investing multiplies it. To beat inflation and build real wealth, make your money earn for you. That's the secret to achieving financial stability in the modern age.
AssetPlus provides a full suite of tools to make this an easy process:
FundFinder recommends risk tolerance and time-based discounted schemes.
The goal-based SIP calculator assists you in determining the amount that has to be invested every month.
Portfolio performance analytics track real-time growth.
Principle 4: Prepare for the Unexpected
Unforeseen events, such as losing a job, suffering a medical crisis, or facing a market downturn, can disrupt even the most carefully constructed portfolios.
Build a Contingency Planning Framework:
1. Emergency Fund
Establish an emergency fund with 3–6 months' worth of fixed monthly expenses such as rent, EMIs, shopping, school fees, and electricity bills. Keep the fund invested in liquid assets such as a money market mutual fund or high-interest savings accounts.
2. Insurance Coverage
Health Insurance: Secure at least ₹10–15 lakh in family cover, and consider top-up plans to expand your protection.
Life Insurance: Opt for a term policy worth 10–15 times your annual income to safeguard dependents.
Personal Accident Cover: Choose a plan that offers income replacement in case of temporary or permanent disability.
3. Budgeting Strategy
Follow the 50-30-20 rule - Allocate 50% of income to essentials, 30% to lifestyle and discretionary expenses, and 20% to savings and contingency planning.
4. Documentation
Keep both digital and physical copies of:
Insurance policy numbers.
Nominee details.
Emergency contact information.
AssetPlus allows you to manage policies, create backup folders, and evaluate emergency reserves with advisory guidance. Anticipatory planning prevents you from selling long-term assets in times of emergency, preserving the integrity of personal finance and wellness systems.
Principle 5: Make Informed Money Decisions
Investment choices made on rumors or social media financial health tips undermine financial well-being. Rather, build a foundation of financial literacy and a strategy based on personalized goals, timeframes, and risk tolerance.
Many young professionals invest because of internet recommendations or peer pressure. These actions increase volatility, damage returns, and affect overall financial wellness and mental health.
Here is a checklist for informed decision-making:
Decision Area | What You Should Know |
Mutual Funds | Types (equity, hybrid, debt), expense ratios, and exit load |
SIP vs. Lumpsum | Suitability based on time, market entry, and risk |
Life and Health Insurance | Term vs. ULIP, riders, tax benefits |
Credit Usage | How credit scores work, interest rates, and repayment schedules |
Tax Planning | Sec 80C, Sec 80D, NPS benefits under 80CCD(1B) |
AssetPlus simplifies decision-making through:
Financial literacy webinars.
Certified advisor sessions.
Comparison and tax-planning tools.
Decision-making improves outcomes only if investors tie decisions to long-term goals. Once you understand where your money is headed and why it matters, you maximize portfolio returns and enjoy the emotional benefits of financial planning.
Principle 6: Align Your Money with Your Goals
Investing without any goal in mind is sailing without any destination. To achieve financial security, you must assign a purpose to every rupee. When your investment plan reflects your personal goals, you remain motivated, regular, and emotionally invested.
Begin by segmenting your goals into short-term, medium-term, and long-term goals. Such segmentation allows you to select financial products based on risk appetite, liquidity requirements, and investment horizon.
Goal-Based Investment Allocation:
Time Horizon | Goal Examples | Suitable Instruments |
Short-Term (0–3 yrs) | Emergency fund, travel, and consumer durables | Liquid Funds, Recurring Deposits, Short-Term Bonds |
Medium-Term (3–7 yrs) | Wedding, car, house down payment | Balanced Advantage Funds, Gold ETFs, and Hybrid Mutual Funds |
Long-Term (7+ yrs) | Retirement, a child’s education, and financial freedom | Equity Mutual Funds, NPS, PPF, Direct Stocks |
Set SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound—to bring structure to your wealth-building process.
AssetPlus helps with:
Dashboards that display real-time goal progress.
SIP automation to fill financial gaps.
Checklists that match each investment to a goal.
Once you make the shift to a goal-based system, each investment decision becomes deliberate. Visualization removes uncertainty, prevents emotional exits in declining markets, and enables financial stress management.
Principle 7: Simple and Consistent
Several investors believe that wealth creation is a matter of dealing with enormous volumes of financial products. This false presumption can generate over-diversification, scattered portfolios, duplicate funds, and lower transparency.
Simplicity in investment brings strategic clarity. It guarantees quicker decisions, simpler tracking, and adherence to your financial objectives.
If you know every constituent of your portfolio and what it does, you stay disciplined even in turbulent market times.
How to Keep Structure Simple:
Limit mutual funds to 4–6 across equity, debt, and hybrid categories.
Avoid holding multiple ULIPs, demat accounts, or FDs—consolidate where possible.
Opt for a term life insurance plan and a single-family floater for health coverage.
Use digital dashboards to manage SIPs, insurance, and overall asset performance.
How to Improve Consistency
Pick a fixed date monthly to review bank, credit card, and investment statements.
Use STPs to automatically adjust equity and debt allocations.
Review portfolios quarterly, not emotionally during market swings.
Set auto-reminders for SIPs and insurance renewals to avoid missed deadlines.
AssetPlus incorporates financial reports, performance notifications, goal-tracking dashboards, and SIP tracking software. The software assists investors in using technology for holistic wellness and automating investment commitments.
Principle 8: Plan for the Distant Future, Now
Retirement is far away, particularly for working professionals in their 20s and 30s, but this myth leads to expensive delays. Compounding power needs money and time. Early start saves considerable cost, while delay is expensive and stressful.
Example - Creating a ₹3 Crore Retirement Corpus
Starting Age | Monthly SIP Needed (Assuming 12% Return) |
25 | ₹4,600 |
30 | ₹8,200 |
35 | ₹14,600 |
A five-year delay increases the monthly effort by more than three times. So, plan if you want financial security.
Retirement planning must provide growth, security, and tax efficiency. The major tools are:
Employee Provident Fund (EPF): Provides fixed, risk-free returns to salaried employees.
National Pension Scheme (NPS): Mix of equity and debt along with extra ₹50,000 tax deduction under Section 80CCD(1B).
Equity Mutual Funds: Provide long-term growth with capital growth.
Public Provident Fund (PPF): Provides tax-free interest and a government guarantee.
Begin today - the small steps taken today lead to financial freedom tomorrow.
Principle 9: Protect Your Legacy
Financial planning should continue beyond your death. Without well-planned estate planning, your wealth, accumulated over a lifetime, can turn into the cause of dispute or legal challenges for your family.
Key Elements of Legacy Planning:
Will: Create and sign a will stating how assets should be distributed. Make sure it is updated with your current assets and family situation.
Nomination Updates: Allot and timely update nominees in all money items such as bank account, mutual fund account, insurance policy, and provident fund account.
Joint Holdings: Establish joint holdings in property, such as a bank account or land, to ensure easy transfer and lesser delay.
Power of Attorney (PoA): Specify a trustworthy person to receive money or make medical decisions in emergencies or your absence.
Document Access: Keep important financial records, passwords, insurance documents, and identification proofs safe but within easy access to a reliable dependent/relative.
Guardianship Arrangements: If you have dependent children, name a guardian to care for them in case of untimely events.
Such best practices protect your legacy and reduce stress for loved ones, leading to holistic wellness.
Principle 10: Review and Evolve with Life
Your money plan must be dynamic and flexible. A static plan can serve you in the short run, but ultimately, it does not account for the inevitable dynamics of your business, financial, and personal life.
Situations That Require Rebalancing Money:
Divorce or Marriage: Affects dependents, cash flow, and insurance needs
Business Opportunity or Job Transition: Alters income source and tax obligation
Birth or Education Milestones: Requires education planning, health care, and lifestyle enhancement
Asset Purchase: Affects liquidity, long-term savings percentage, and debt strategy
Inheritance or Stock Windfall: Requires effective rebalancing and tax optimization
Structured Planning Process includes:
Frequency | Key Focus Areas |
Quarterly | Portfolio performance, SIP continuity |
Annually | Goal tracking, asset reallocation, and insurance gap |
After Major Life Events | Emergency fund, nominee update, goal reprioritization |
How AssetPlus Helps:
Sends automated reminders to rebalance your portfolio.
Supports SIP top-ups to keep up with income growth.
Offers annual MFD guidance for portfolio and goal check-up.
Begin a personal finance and wellness journey as an ongoing process. Regular check-ups keep you ahead of life changes and maintain long-term stability and growth.
Conclusion: Financial Well-being Is a Way of Life, not a Quick Fix
Financial wellness doesn't emerge overnight. It is a string of smart decisions, discipline routines, and systematic planning sustained over time. Genuine wellness is taking charge of your money; your money is not in charge of you.
Start today, take small steps today, and create a healthy tomorrow. You need:
Clear financial goals.
Value-based budgeting.
A future-oriented investment strategy.
Adequate protection against risk.
Monitoring of performance regularly.
A values-based long-term vision.
Start where you are. Open your first SIP, get term insurance coverage, or prepare your first will - every step counts.
Collaborate with AssetPlus experts and unlock access to tools, calculators, expert advice, and one-on-one assistance from qualified Mutual Fund Distributors. Design a financial plan that brings clarity, consistency, and confidence.
Financial wellness is real wellness - invest in both.
FAQs
What are some early warning signs of poor financial wellness?
Early warning signs include high credit card bills, missed EMI payments, irregular saving habits, and stress related to unexplained expenditure. Detect these warning signs at the initial stage and respond before money concerns grow.
Financial wellness vs. high income. - How are they distinct?
How does financial well-being affect professional performance?
Can I become financially wealthier without an increase in earnings?
How does technology contribute to financial well-being?