Money touches every corner of life—education, healthcare, relationships, and retirement dreams. But not everyone experiences financial stability. Financial difficulty occurs when your income is insufficient to consistently cover your needs, obligations, or emergencies. It doesn’t just mean poverty; even middle-class families, salaried professionals, or business owners can fall into financial strain.
In India, rising aspirations, urban living costs, and lifestyle inflation often put a strain on finances. Understanding why financial problems happen and how to cope is the first step toward financial recovery and resilience.
What Does Financial Difficulty Mean?
Financial difficulty occurs when:
- Your expenses exceed your income regularly.
- You rely on debt (such as credit cards and loans) just to survive.
- You delay or miss payments on EMIs, rent, or utility bills.
- You feel constant stress and anxiety about money.
👉 It’s not always permanent—it may be temporary (job loss, medical emergency) or long-term (chronic debt, poor money habits). The key is recognizing it early.
Common Causes of Financial Difficulty
1. Job Loss or Irregular Income
In India’s gig economy, freelancers, contract workers, and start-up employees often face delayed payments or sudden layoffs. Without an emergency fund, one month of job loss can trigger a debt spiral.
2. Medical Emergencies
Healthcare inflation in India is real. A single hospitalization can wipe out years of savings if you lack adequate health insurance.
Case Study: A Delhi-based family spent ₹8 lakh on cancer treatment. Without insurance, they liquidated their fixed deposits, which were meant for their child’s education.
3. Excessive Debt
High-interest loans, especially credit card debt with annual interest rates of 36–42%, can quickly trap people. Many borrow to pay off old loans, deepening the cycle.
4. Poor Financial Literacy
Lacking knowledge of the basics of budgeting, saving, and investing can lead to overspending and poor financial choices.
5. Lifestyle Inflation
As salaries rise, so do expenses—branded clothing, larger cars, and luxury vacations. Instead of building wealth, money seems to disappear.
6. Business Failures or Market Risks
Entrepreneurs, stock traders, and small business owners often face losses. Without backup savings, it translates to personal financial stress.
7. Lack of Planning for Big Expenses
Indian families often spend heavily on weddings, real estate, or children’s foreign education without structured savings, leading to loans and long-term EMIs.
10 Proven Coping Strategies for Financial Difficulty
1. Assess Your Financial Situation Honestly
Write down:
- Total income (salary, rent, side income).
- Fixed expenses (rent, EMIs, utilities).
- Variable expenses (shopping, dining, subscriptions).
- Total debt (loan balances, interest rates).
👉 Awareness is the first step. Just like a doctor diagnoses before prescribing treatment, you must know the numbers.
2. Prioritize Essentials Over Lifestyle Wants
Distinguish between needs (food, rent, electricity, medicines) and wants (new gadgets, OTT subscriptions, weekend getaways).
- Example: Cutting down on three streaming subscriptions (~₹1,200/month) frees ₹14,400 annually—enough to cover 1 EMI.
- A couple in Bengaluru discovered that their food delivery bills exceeded ₹10,000/month. By cooking at home, they redirected savings toward paying off debt.
3. Create a Lean Budget
A budget is your money compass. Use the 50-30-20 Rule (Needs 50%, Wants 30%, Savings/Debt 20%)—or, if you’re in crisis, flip it to 70-20-10 (Needs 70%, Debt 20%, Wants 10%).
- Tools: Excel sheet, Google Sheets, or apps like Walnut & Moneyview in India.
4. Build (or Rebuild) an Emergency Fund
Even during difficulty, aim to save small amounts. Start with ₹500–₹1,000/month. Keep it in a liquid mutual fund or savings account.
👉 Rule of thumb: At least 3–6 months of living expenses.
Case Study: Ramesh, an Ola driver in Mumbai, saved ₹500/day during good months. When his car needed ₹25,000 repairs, he didn’t borrow from moneylenders.
5. Negotiate with Creditors
Banks and lenders often allow restructuring, lower EMIs, or extended tenure if you explain your hardship.
- Example: During the COVID-19 pandemic, lakhs of Indians opted for RBI moratoriums to avoid defaults.
- Pro Tip: Approach creditors before missing payments—it shows responsibility.
6. Cut High-Interest Debt First (Debt Avalanche Method)
If you have multiple debts:
- Pay the minimum on all.
- Aggressively repay the highest interest debt (usually credit cards).
- Once cleared, proceed to the next step.
- Example: Clearing a ₹1 lakh credit card balance at 36% saves you more than closing a 10% personal loan first.
7. Increase Income with Side Hustles
While cutting expenses helps, earning more speeds recovery.
- Options: Freelancing (content writing, coding), part-time tutoring, food delivery, or monetizing hobbies (photography, crafts).
- Story: Nidhi, a school teacher in Jaipur, earned an extra ₹7,000/month tutoring online, which she used solely to repay her education loan.
8. Seek Professional Financial Counseling
If debt feels overwhelming, reach out to certified financial planners or credit counseling services.
In India, organizations such as the ICICI Foundation offer basic financial literacy and debt assistance.
9. Use Government Schemes & Benefits
India offers multiple schemes for financial relief:
- PMJJBY/ PMSBY – low-cost insurance.
- Jan Dhan Accounts – no-frills banking.
- Atal Pension Yojana – a low-cost retirement plan.
- Subsidized education loans for students from weaker sections.
👉 Many ignore these benefits due to a lack of awareness.
10. Focus on Mental Health & Family Support
Financial stress often leads to anxiety, depression, or strained relationships. Remember, money is replaceable—health and relationships are not.
- Story: A Pune-based couple faced debt after a failed business. By openly discussing their situation with their parents and siblings, they received temporary financial help and emotional support, rather than suffering in silence.
Short-Term vs. Long-Term Fixes for Financial Difficulty
| Category | Short-Term Fixes (Quick Relief) | Long-Term Fixes (Sustainable Stability) | Indian Example |
| Cash Flow Management | Cut discretionary spending (e.g., dining out, OTT subscriptions). | Build a lean budget & track expenses monthly. | A Bengaluru couple canceled three streaming apps and redirected savings toward EMIs. |
| Debt Handling | Pay minimum dues to avoid penalties. | Follow the Debt Avalanche Method to clear high-interest loans first. | Rakesh from Delhi cleared ₹1.2L credit card debt before focusing on a car loan. |
| Income Boost | Consider taking on gig work, such as weekend food delivery or tutoring, to supplement your income. | Develop secondary income streams (freelancing, rentals, side business). | Nidhi, a teacher in Jaipur, earned ₹7,000 per month tutoring online until her loan was repaid. |
| Emergency Needs | Borrow small amounts from friends/family for immediate bills. | Build a 3–6 month emergency fund in liquid funds. | Ramesh, an Ola driver, saved ₹500/day, avoiding loan sharks during a car breakdown. |
| Insurance | Rely on employer health coverage temporarily. | Buy adequate personal health and term insurance. | A family in Delhi avoided selling assets because they had ₹10 lakh in health coverage. |
| Mindset & Stress | Seek temporary relief via moratoriums or rescheduled EMIs. | Cultivate financial discipline & discuss openly with family. | A Pune couple openly discussed their business loss with their parents, receiving both financial and emotional support. |
Final Words
Financial difficulty is not a life sentence—it’s a phase. Almost every Indian family has faced it at some point—whether it’s job loss, medical bills, or mismanagement of debt.
The difference lies in response: those who accept, plan, cut costs, increase income, and stay disciplined bounce back stronger. Those who deny or delay often sink deeper.
Remember: Your financial recovery journey is not about perfection; it’s about progress.
Disclaimer
The information provided in this blog is for educational purposes only and should not be considered as financial, investment, or tax advice. Please consult a qualified financial advisor before making any investment decisions.
VSJ FinMart is an AMFI-registered mutual fund distributor (MFD) and does not provide investment advisory services. Mutual fund investments are subject to market risks; please read all scheme-related documents carefully before investing.