9 Financial Lessons To Be Learnt This Navratri

Date: 14th Oct, 2018| Time to Read: 3 mins

Navratri is an auspicious period to yield appropriate results from any mantra – even the money mantra. And the tenth day, i.e. Dussehra or Vijayadashami, it’s time to celebrate the triumph of good over evil.

Here are nine financial lessons to learn this Navratri:

1. Discipline –

   To keep away the ill-habits, leading a disciplined life is a must. Also, manoeuvring your thoughts positively is important to live a good and happy life. Similarly, to manage your personal finances efficiently, discipline is essential in the interest of your financial well-being.

   Handling your own hard-earned money with enough care and prudence is crucial. Therefore, engage in a budgeting exercise so that you can save money and invest it sensibly to accomplish your envisioned financial goals – be it buying a dream home, children’s higher education expenses, for their wedding expenses, and your retirement, among a host of others.

2. Set S.M.A.R.T financial goals –

   The goals you set need to be Specific, Measurable, Adjustable, Realistic, and Time-bound (S.M.A.R.T)

           Napoleon Hill has aptly said, “A goal is a dream with a deadline.” ­Hence, when you set financial goals, classify them into short-term, medium-term, and long-term. Have goals with time frames assigned to each: 1 year, 2 years, 3 years, 5, years, 7 years, over 10 years and so on.

           If you attempt to execute a financial plan without following the above, you could be a lost man at sea – sailing without a sense of direction.

3. Save and invest wisely –

   To accomplish the envisioned financial goals and for your financial future, you need to save and invest hard-earned money in productive asset classes and investment avenues so that you counter inflation, which otherwise erodes the purchasing power of your hard-earned money.

   However, while investing, being mindful of the right investment/asset mix (also known as asset allocation) recognising your risk appetite.

4. Stay focused on the journey of wealth creation –

   Distractions are everywhere to give you a panic attack – market turbulence, policy changes, etc. Sometimes markets would even behave in an irrational manner. No matter what the reasons for the short-term turbulence in the market are, fear should not sway you.

   When you invest to accomplish your envisioned financial goals, it is important to stay focused and be patient. “Patience is a virtue”, a wise man once said.  As long as you have sensibly engaged in investment planning and build a solid investment portfolio of worthy instruments, you need not worry.

   Also, look for opportunities or invest in businesses, to build more assets and generate a strong flow of income. Plus, use the income earned to generate more returns or wealth so that it leads you to financial freedom.

5. Monitor and realign –

   While you should not get swayed by short-term aberrations, it is important to regularly review your portfolio to ensure that you’re on track in the journey of wealth creation and accomplishing financial goals.

   Once every year, review and realign/rebalance your assets to incorporate personal changes or economic fluctuations to stay in line with your targets set. Replace the non-performing investment instruments with the worthy ones. If you do not this, you may bid adieu to your financial goals forever.

6. Plan for the unexpected –

   Emergency situations like loss of job, hospitalization, unexpected increase in your child’s school fees, etc., can arise at any moment and leave you high and dry. Life throws a nasty surprise when it is least expected.

   Hence, it is better to be prepared to counter such events by building a rainy day fund.

   Remember the old adage, ‘A stitch in time saves the nine’.

   While a personal loan can help you address such situations, having an emergency fund, also known as a contingency fund or a rainy day fund is very important.

   Ideally, you must maintain at least 6 to 24 months of living expenses, including EMIs as your emergency fund in a savings bank account. You may add a little 5%-10% extra for medical emergencies, taking cognizance of the health insurance and medical records of you and your family members.

7. Insure yourself optimally –

   The purpose of insurance is indemnification of risk from an untoward event. Hence, make sure you’ve optimally insured yourself for both, life and health. And as far as possible, do not commingle your insurance and investment needs ––deal with them separately.

   For life insurance, consider a term plan, and for health insurance needs a medi-claim policy with worthy features, as medical inflation is skyrocketing.

8. Reduce your debts –

   Taking a loan for certain purposes such as buying a property, a car, for higher for higher education needs, etc. is perfectly fine. All of us seek a loan at some point in time or other.

   But repaying the debt obligation is equally important. If you are borrowing thoughtlessly, it could result in a situation of debt-overhand and jeopardise your long-term financial health.  Hence, just as you clean your home during festive times for it to appear neat, make it a point to repay and clear your debt diligently over time.

9. Increase your credit score –

   Credit score reflects your credit behaviour and creditworthiness. If your credit score is low, it could hinder access to a loan when you need it the most. Thus, if your credit score is low, make a genuine effort to improve it.Keep a respectable credit score of at least 750 and above at most times.

[Read: How To Improve Your Credit Score?]

And finally, on Dussehra or Vijayadashami, one of the most auspicious days, make a new beginning, start a new journey with focus, discipline, and a positive outlook which can brighten up your financial future.

Happy Banking!

Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm known for offering unbiased and honest opinion on investing. Axis bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.