This Janmashtami Learn 5 Financial Mantras from Lord Krishna

The Lord Krishna's teachings can serve as the guru mantras for success if they are applied to financial management in addition to life lessons. Janmashtami is the time to use some of these strategies to administer your finances and fulfil all the personal investment objectives.

However, the most eye-catching aspect of the Janmashtami festival is the 'Dahi-handi' event. At Vrindavan, little Lord Krishna was well known for his mischief across the village. Makhan was one of his favourite food items. He was so fond of Makhan that he would go from home to home stealing it as soon as it was churned.

The women of Vrindavan would tie their freshly churned Makhan to the roofs of their homes to prevent him from getting to the pot of butter. But since the pots were made of baked clay and were rather brittle, Lord Krishna and his companions would construct a human pyramid to reach them and frequently destroy them while stealing the butter.

The 'Dahi-handi' event is performed to enact Lord Krishna's act of stealing butter from a hanging pot. Several individuals from the community form a human pyramid and attempt to reach out to a pot hanging high and break it. The pot often carries prize money/reward for the participants. To carry out this activity successfully, the pyramid formation needs to be strong and strategic.

Parallels can be drawn to your financial management, and inspiration from this pyramid formation can be taken to build your financial plan and achieve envisioned financial goals. Most of you are willing to attain a state of contentment when it comes to building wealth and living a financially stress-free life. Well, this requires a strategic step-by-step approach as attempted by Lord Krishna to form the Dahi-handi pyramid.

Let's look at the layers in detail and it will assist you to form a financial pyramid to reach your pot of Makhan (your financial goals):

1. Set a Sturdy Foundation

You need to lay the groundwork for your financial planning first. Start saving as early as possible to form a strong base, which is essential to building your financial pyramid. As the layers on top are to rest on the base, similarly your habit of savings will assist you with the other layers of financial planning. In order to maximise your saving, you need to perform budgeting exercise, track your cash flow and cut off avoidable expenses. In addition, this habit of saving regularly will help you tackle your tendency to splurge impulsively, increase your saving for investing purposes and bring you closer to your financial goals.

2. Create a Safety Net

Although you have a strong foundation you need to maintain a safety net in case of emergencies. The first layer in the pyramid after the base should act as your safety net to fall back on. Similarly, you need to create an emergency fund that is your financial cushion to survive the challenges that may occur due to uncertainties of any unforeseen event.

Maintain a separate emergency fund to tackle financial exigencies such as severe illness, accident or any other unexpected event in life. Emergencies strike without warning, and they often come with various financial complications. The COVID-19 pandemic is a classic example that has taught us to be prepared for any emergency which could prevent an impact on your financial well-being.

Ideally, the emergency fund should contain an amount of 12-24 months' worth of living expenses, including loan EMIs if any. Savings accounts offering a decent interest rate or liquid funds under mutual funds are a great avenue to park your emergency funds. The absence of it would result in the requirement of borrowing funds on an immediate basis, from lenders or family or exhausting your credit card limit to pay for such unexpected expenses.

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3. Secure Yourself and Your Family

The next step would be to add a financial security layer to respond to situations like abrupt health problems, the death of a sole earning member of the family, etc. It is essential to maintain adequate insurance cover for yourself and your family. Not having adequate life and health insurance coverage can be a major financial mistake that one makes. Lack of insurance may create financial hardship in times of emergencies, be wise and protect your loved ones by putting an insurance plan in place and preparing for the unexpected.

Just like Lord Krishna was prepared for any difficult circumstances and worked to ensure a safer livelihood for his loved ones. You must aim to insure your family and yourself, with the help of term Insurance and health insurance that indemnifies the risk to your life and health.

In the event of a medical emergency, health insurance can help you cover costs for expensive health treatment before and after hospitalisation. Term insurance on the other hand can replace your income in case of your untimely death. This will ensure a comfortable life for your family in your absence. If you already have insurance cover, review your policy with your agent to make sure you are optimally insured.

4. Shrink your Debts Obligations

Now that you have built a strong foundation and ensured financial security, you can move up the pyramid by removing obstacles and lightening the load. In simple words, to level up your financial pyramid you need to reduce your debt burden, as it consumes a major portion of your income.

Having debt is not bad but not being able to repay it on time is harmful to your financial health. You may have borrowed a loan to fulfil some financial requirements such as an education loan for your children or a home loan. Ensure you make timely repayments and maintain a good credit score for future eligibility of any borrowings. Do not borrow another loan to pay off the existing loan EMIs it will create a debt burden for you.

Additionally, many individuals prefer shopping by using credit cards with special discounts during such festive seasons. Do note that, you may end up falling prey to debt traps as credit cards charge a very high rate of interest and borrowing consumer durable loans or personal loans at high-interest rates may increase your debt burden.

Maintain a debt-free life to attain a financially secured future. You must ensure that your debt-to-income ratio is below 40% and you are capable to repay the loan on time. You must focus on debt reduction and management, as it will help you to maintain your financial well-being and prevent you from any debt stress.

5. Add a Ladder of Worthy Investments

Every small investment you make in various avenues acts as a ladder and elevates you towards achieving your envisioned S.M.A.R.T financial goals. Saving is merely parking your idle money in your bank account, without the motive of generating much return from it. However, investing is when you put your surplus money to use, by parking them in investment avenues such as Fixed deposits, Mutual funds etc.

When you invest, your money works for you by generating returns during the investment period. Do note that each investment carries certain risks, you should ensure to invest in worthy avenues as per your suitability based on your risk-taking capacity, investment horizon and goals.

Just like Lord Krishna planned to climb up to get to his 'lofty' goal, similarly, regardless of how high your goals are, consider every investment as a ladder and keep trying to reach your goal by taking small steps through the Systematic Investment Plan (SIP) in mutual funds. For instance, you may start by investing smaller amounts as low as Rs 500 per month in mutual funds via SIPs and gradually increase the amount once you are confident with investing your money and are financially aware.

In this journey of wealth creation, the ladder of investments may wobble and tumble, as markets may witness periods of volatility. You must persist, as Krishna did, and get closer to your goals by ensuring to invest in worthy mutual fund schemes and build a corpus.

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To conclude...

Janmashtami is the ideal time for you to smash the proverbial Handi and enjoy your life's rewards. Many individuals are seeking to attain their financial goals but fail due to a lack of financial planning. To create a robust financial plan you should be aware of the nuances of financial planning. Financial knowledge assists you to understand the nitty-gritty of financial planning.

As in Mahabharata, Krishna's wisdom, counsel, and clever strategies enabled Arjuna to emerge victoriously. Similarly, you must have a good charioteer, like Lord Krishna was for Arjuna during the battle of Kurukshetra. Financial knowledge could be the charioteer that guides you to make informed investment decisions, build a robust financial plan and stops you from investing in unworthy schemes.

Additionally, financial knowledge will equip you with the nuances that can help you make informed investment decisions, be a financial guardian to your family and secure their financial future. If you follow the financial pyramid strategy, it may help you to have better control of your finances and ensure you achieve your envisioned financial goals.

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Warm Regards,
Mitali Dhoke
Research Analyst