5 Measures to Take Your Financial Health to New Heights This Makar Sankranti

Makar Sankranti is celebrated with great enthusiasm. 'Til Gul' (a sweet made of sesame seeds and jaggery) is prepared at homes, especially in Maharashtra, adults and kids alike enjoy flying kites on this day. The International Kite Festival (Uttarayan) is one of the biggest festivals celebrated in Gujarat on the occasion of Makar Sankranti.

While flying kites on Sankranti is a tradition, there are scientific reasons too. It's for healthy exposure to the early morning sun rays, a rich source of Vitamin D. The sunlight acts as a disinfectant and helps get rid of skin infections and other diseases. Having said that, did you know Makar Sankranti also has financial significance? If you're wondering how, take a look at everything you can learn about financial planning from this festival.

Flying kites on Makar Sankranti also holds many crucial lessons, which, if imbibed, help you stay financially stable. Flying a kite high in the sky necessitates preparing the kite with a strong string, knowing the wind direction, precise efforts to hold the kite against the wind flow, focus, and an effective technique to fly higher than other kites while protecting your string from being cut. Managing your finances is analogous to flying a kite; consider your financial planning to be the strong thread that you must grip tightly in order to balance and fly high your kite, which is your financial wellbeing.

This Makar Sankranti, take these measures to make your finances fly high like your kite:

1. Eyes on Your Goals (the kite) -

The shape of the kite plays a crucial role in its lift-off. If the shape isn't proper, the kite will fail to take off. You always need to keep an eye on it, set a target to fly high up in the air, and do not lose sight of the direction it is flying in.

Similarly, setting S.M.A.R.T financial goals gives you a sense of purpose and direction. Break down your goals into long-term, medium-term and short-term time frames. Goals keep you motivated, and you must ensure that your investments are aligned with your financial goals so that you reach your goals in the desired time. In case of any uncertain events, modify your financial goals if required, considering the changes in your financial circumstances.

2. Take off in the Right Direction (the flight) -

Just like a kite can lift off gently with the slightest breeze if held in the proper direction, making a mutual fund investment in the right direction by aligning it to your financial goals can work wonders in growing your wealth.

This way, you will invest in profitable investment instruments with proper asset allocation and diversification, which aids in wealth creation and forming a robust investment portfolio. Always account for the impact of inflation on your investments, and invest wisely in worthy and best-suitable mutual fund schemes. Most importantly, assess your risk appetite and investment horizon and align your investments with your financial goals.

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3. Flexibility is the Key (the manjha/string) -

You should always be prepared to make adjustments as the situation demands. It means when you are in the midst of a strong gust of wind, you have to let go of the string and adapt to the situation. Too much wind could damage your kite, while too little wind could make it difficult to keep your kite afloat. You must assess the scenario while watching your kite's movements and react accordingly.

Similarly, there are various market phases your investments go through, and the portfolio performance may fluctuate; thus, you need to look after your investments by conducting a timely review. It may sometimes seem that the investment you made may not be good. That is the moment to identify and eliminate the consistently underperforming investments that weaken your portfolio's overall returns. If you want to maintain a robust investment portfolio that survives through the thick and thin of volatile markets and macroeconomic conditions, a certain degree of flexibility and adaptability is advisable.

4. Maintain an Emergency Fund (the Firki/Spool) -

In Makar Sankranti, we often see people on terraces where one manoeuvres the kite while another is standing beside the kite flyer holding a spool/Firki. The spool is used to store the excess thread used to fly a kite, and its sole purpose is to release and retract the correct amount of string at multiple instances in order to propel the kite higher.

Similarly, you need to maintain a contingency reserve so that it helps you keep your financial stability intact when any financial exigency or uncertain event occurs. This will act as a safety net and provide you with financial support in challenging times and does not hamper your financial health.

In other words, it is crucial to set money aside in a savings account or invest in liquid funds as a contingency reserve. Ideally, this emergency fund should be sufficient to cover expenses for 18-24 months, with monthly expenses including EMIs.

5. Appropriate Protection - (the insurance)

The 'manjha' is an abrasive string coated with powdered glass that provides the quintessential strength in flying kite combats. Thus, while flying a kite, you need to have your fingers covered with bandages and Medi-tapes so that you don't cut your finger.

Similarly, you should insure yourself against threats to your financial future by purchasing proper insurance coverage. With the increased risk to an individual's life and health as a result of pandemic uncertainty, it is critical that you obtain adequate insurance coverage. Adequate life and health insurance cover will help your family to fulfil their financial requirements in your absence.

Lack of insurance may create financial hardship in times of emergencies. Many life and health insurance options are affordable and offer you plans that cover your entire family. Remember, you have to ensure the terms and conditions of the insurance policy before purchasing for easy access to claims.

Therefore, if you want to fly your kite of financial health high, control your string with proper financial planning.

Do note, no matter how potentially well-designed the kite is aerodynamically, if you lack the knowledge to follow the effective technique and balance your kite high up in the air, it is at risk. It won't be able to soar higher above the competition.

Similarly, if you want your kite of financial wellbeing to reach new heights, you must focus on improving your financial literacy to keep your string (finances) under control. Financial knowledge will assist you to understand the nuances of financial planning and implement them to secure your financial future. Makar Sankranti is the beginning of the new season; thus, it is an ideal time to begin your financial planning and make informed financial decisions.

Warm Regards,
Mitali Dhoke
Research Analyst