Achieving financial goals may be a key objective for many Indians, but for a significant number of people, those very goals have become a source of anxiety.
According to Zee Business research, nearly 41 per cent of Indians say their financial goals are the biggest reason behind their stress. The findings also indicate a financial well-being score of 62 out of 100, indicating that concerns around financial security persist. The issue appears to be more pronounced among urban Indians, while younger individuals and women were identified as groups reporting lower confidence about their financial security.
The study points to factors such as rising inflation, EMI burdens, children’s education expenses and future planning concerns as contributors to growing money anxiety.
Speaking on Zee Business, financial experts said financial stress is increasingly being driven by inflation, rising lifestyle expenses, inadequate financial planning and investment habits that struggle to keep pace with long-term financial needs.
Why are financial goals becoming stressful?
Hemant Rustagi, CEO of Wiseinvest, said financial stress is closely connected to a person’s financial security and ability to achieve future goals.
“When people are unable to control their expenses or do not have sufficient money available to invest towards their financial goals, financial stress is a natural outcome,” Rustagi said.
He noted that investment and spending patterns in India have changed significantly over the years. While previous generations were largely conservative savers, rising lifestyle aspirations have increased spending pressures for many households.
According to Rustagi, many investors continue to rely heavily on traditional investment avenues that struggle to generate returns capable of consistently beating inflation.
“Conservative investment choices may provide safety, but they often make it difficult to build enough wealth for future goals. If investors are unable to keep pace with inflation, their financial objectives become harder to achieve,” he said.
Rustagi also pointed out that despite growing awareness of market-linked investments, only about 7-8 per cent of Indians invest in equity or market-linked products, limiting the ability of many households to create long-term wealth.
‘Some financial stress can be useful’
Rushabh Desai, Founder of Rupee With Rushabh Investment Services, said a moderate level of financial stress can serve as a motivator for better financial planning.
“A small amount of stress and anxiety is natural. It encourages people to focus on their finances, plan better and work towards their goals. The issue arises when stress becomes excessive and starts affecting decision-making,” Desai said.
He stressed that one of the biggest mistakes investors make is treating financial planning as a one-time exercise.
“Financial planning is a process, not an event. It starts when you begin earning and continues throughout your life. Your financial plan must evolve with changing circumstances, responsibilities and goals,” he said.
‘India is a nation of savers, not investors’
Desai observed that while India has traditionally been a strong saving economy, many investors are not allocating enough money to assets capable of generating inflation-beating returns.
“We have more than Rs 200 lakh crore parked in fixed deposits. This clearly shows that Indians are good savers, but not necessarily good investors,” he said.
According to him, equity remains one of the few asset classes capable of comfortably beating inflation over long periods.
“If investors want to preserve and grow purchasing power, they need to move beyond savings alone and focus on appropriate investments as well,” he said.
Needs vs Wants
Another major factor behind rising financial stress, according to Desai, is the inability to differentiate between needs and wants.
“We are living in a time when many wants are being treated as needs. Investors should clearly distinguish between the two. If wants keep entering the needs category, expenses rise rapidly and financial discipline becomes difficult,” he said.
Desai advised individuals to align their spending with their income levels and avoid taking on unnecessary debt to fund lifestyle consumption.
Why investors fail to achieve financial goals?
Rustagi said achieving financial goals requires more than simply starting an SIP or making investments.
“Investment is a journey that begins with planning and continues until goals are achieved. Success depends on how investors handle challenges throughout that journey,” he said.
He identified inflation, poor planning, uncontrolled spending and emotional reactions to market volatility as key reasons investors fail to meet their goals.
According to Rustagi, many investors begin SIPs without clearly defining their goals, investment horizon or asset allocation strategy.
“When market volatility arrives, investors who are not mentally prepared often stop their SIPs or alter their asset allocation. Such interruptions can significantly affect long-term wealth creation,” he said.
He added that increasing spending on travel, gadgets, dining out and other lifestyle choices often diverts money away from long-term investments.
“The challenge is not that people want to enjoy their lifestyle. The challenge is when lifestyle spending comes at the cost of long-term financial commitments,” Rustagi said.
Young investors and women reporting higher anxiety
The experts noted that younger investors and women are among the groups reporting greater concerns about financial security.
Rustagi said that although investor maturity is gradually improving and more young people are participating in financial markets, many continue to struggle with balancing current lifestyle spending and future financial goals.
“When investors start worrying that they may not be able to achieve important future goals, financial anxiety naturally increases,” he said.
What are the 3 pillars of financial security?
Explaining how investors can reduce money anxiety and financial stress, Desai outlined what he described as three essential pillars of financial security.
1) Build a strong emergency fund
Desai said an emergency fund is the first line of defence against financial uncertainty.
“We live in uncertain times. Businesses can slow down and jobs can be lost. People need a sufficiently large emergency fund that can support household expenses during difficult periods,” he said.
He suggested maintaining an emergency corpus capable of supporting household expenses for two to three years if income is disrupted.
2) Maintain adequate health and term insurance
The second pillar, according to Desai, is adequate health insurance and term insurance coverage.
“Every family should have adequate health insurance and term insurance. Rising healthcare costs and increasing lifestyle-related illnesses make insurance an essential part of financial planning,” he said.
He added that term insurance ensures dependents remain financially protected in the event of an unforeseen tragedy.
3) Stay disciplined with SIPs
The third pillar is maintaining investment discipline through systematic investment plans.
“Many investors stop SIPs when markets fail to generate returns for a few years. However, market cycles are normal and investors must remain disciplined through such phases,” Desai said.
He also recommended increasing SIP contributions periodically.
“Investors should ideally increase their SIPs by 5-10 per cent every year. This helps keep pace with inflation and supports long-term wealth creation,” he said.
Inflation may feel higher than official numbers
Desai argued that household inflation often feels much higher than headline inflation figures.
While official inflation may appear moderate, he said lifestyle inflation for many middle-class households could be closer to 7-8 per cent. For upper-middle-income households, it may range between 8-10 per cent, while for high-net-worth individuals, it can be even higher, depending on spending patterns and lifestyle choices.
According to Desai, inflation varies across income groups and consumption habits, making long-term wealth creation and inflation-beating investments even more important.
Experts weigh in on investor portfolio strategy
During the discussion, experts also reviewed investor portfolios and highlighted the importance of aligning investments with goals, risk appetite and investment horizon.
Reviewing one investor’s portfolio with a 20-year investment horizon and monthly SIP contributions of around Rs 38,100, Rustagi said the long time frame, commitment to annual SIP increases and disciplined investing approach were positive factors.
He suggested considering a multicap fund and, over time, adding international exposure for greater diversification.
“Global diversification is an important component of long-term wealth creation,” Rustagi said.
In another portfolio review, Desai emphasised the importance of defining three key elements before investing: financial goals, investment horizon and risk appetite.
For a long-term wealth-creation portfolio, he suggested a combination of flexi-cap, mid-cap and small-cap funds to achieve diversification across market segments.
‘Focus on goals, not market noise’
The discussion concluded with a broader message for investors: avoid being distracted by excessive opinions, unsolicited advice and short-term market commentary.
Experts emphasised that investing is a personal journey and that every investor has different goals, risk tolerance and financial circumstances.
Rather than reacting to market noise, they advised investors to remain focused on their objectives, maintain discipline and stay invested for the long term.
(Disclaimer: This article is only for educational purposes, not investment advice. Do your own due diligence or consult an expert for financial planning.)
