This Janmashtami Learn How to Reach Your Financial-Handi (goals)

On this day, people visit Radha Krishna temples, observe fasts, wear traditional clothes, decorate Lord Krishna's idols in new clothes and jewellery, deck up their homes and worship places, prepare delectable snacks, and more.

This year, Janmashtami falls on two consecutive days, and Devotees of Lord Krishna will mark the festival on September 6th and 7th.

Amidst the Janmashtami celebrations, the most eye-catching aspect of this festival is the 'Dahi-Handi' event (human pyramid), which is done to enact the tale of Krishna stealing butter as a child from a hanging pot. It is the most fun-to-do or thrilling aspect of this festival.

In this event, people form a human pyramid and attempt to reach out to a pot hanging high and break it. The earthen pot is filled with ingredients such as dahi (curd), ghee, sweets, makhan (butter), nuts, etc.

In order to carry out the Dahi-Handi act successfully, the human pyramid needs to be strategically built; it should be more robust as the height increases, which needs plenty of practice, focus and coordination. The pot often carries reward/prize money for the participants.

Now, parallels can be drawn and inspiration from this event of 'Dahi-Handi', the pyramid formation can be taken to build your path towards achieving the envisioned financial goals.

As humans, we all have unlimited wants and desires; there are financial goals such as buying our own house, dream car, luxury vacation, child's higher education, wedding expenses, etc. There is an unspoken priority list in our minds.

An American psychologist, Abraham Maslow, was the first person to put a hierarchy of our needs and goals in a pyramid. He believed that every individual has a hierarchy of needs as follows:

Notably, this theory in psychology, comprising a five-tier model of human needs, often depicted within a pyramid, can be connected with a hierarchy of financial needs of an individual. This requires a strategic step-by-step approach, let's look at the layers in detail:

Janmashtami is a good time to familiarise yourself with Krishna's divine philosophy.

Let's consider the 'Dahi-Handi' pot as a pot filled with your financial goals. Learn some of the techniques used while forming a Dahi-Handi to build your pyramid, which is a wealthy corpus to reach your Financial-Handi (financial goals).

5 simple steps to build your financial corpus this Janmashtami:

Step #1 Basic Financial Needs

When creating a path to the top, you must be able to form a sturdy foundation, which lays the groundwork of your financial pyramid. The first or the base of your financial pyramid should be to meet basic financial needs like your daily expenses and short-term spending (groceries, gas, car payments, rent or mortgage payments - the list goes on).

Only when your foundation is strong you will be able to build a pyramid over it and reach your financial goals. The first level suggests that you need to fulfil these basic needs and save money on less volatile and stable instruments.

Start saving early to establish a solid basis that is vital for your financial pyramid, as the top layers will lean on the base. The power of compounding works on growing your money over a long period when you start saving early in your life. You can always start with a small amount and increase gradually.

[Read: Begin with Minimum Investment in Mutual Funds And Watch Your Money Grow]

Indeed, if one starts saving a small amount in their 20's, they could get better returns than someone who is saving a greater amount in the 30's, provided that both retire in the 60's. Thus, by saving at regular intervals, one may get closer to attaining their financial goals.

Step #2 Safety And Security Needs

Life is unpredictable, and anything can happen at any time. Although you have a strong foundation, you need to maintain a safety net in case of emergencies. If one wants to move up the curve and take care of oneself and family's first-level requirements, one needs to secure themselves. And for that, insurance can be a good option.

It is essential to maintain adequate insurance coverage for yourself and your family. Not having adequate life and health insurance coverage can be a major financial mistake that one makes. In the event of a medical emergency, health insurance can help you cover costs for expensive health treatment before and after hospitalisation. On the other hand, term insurance can replace your income in case of your untimely death.

[Read: Why Do You Need Insurance Cover]

The second 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.

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.

Step #3 - Love And Belonging Needs

As per Maslow, the third level in the hierarchy is around feeling secure and halfway there as a sense of achievement. At this stage, investments towards your financial goals related to self or family needs should be taken into account.

The third level of your financial pyramid is like a ladder of worthy investments that could accelerate the pace of reaching your financial goals. This is a very important step which involves making valuable investments in various avenues like mutual funds based on an individual's suitability with risk appetite, investment horizon and alignment to the goals.

[Read: How to Choose Mutual Funds For Your Investment Portfolio]

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 rewarding investment avenues.

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. Having a robust investment portfolio of the best mutual funds could help you build a resilient financial pyramid.

Step #4 - Esteem Needs

The fourth level of your financial pyramid is focusing on your esteem needs, like living a debt-free life. 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.

Just like while forming the 'Dahi-Handi' pyramid, the higher we climb, the less we carry. 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 being unable to repay it on time harms your financial health. Do note that you may fall prey to debt traps as credit cards charge a very high interest rate, and borrowing consumer durable loans or personal loans at high interest rates may increase your debt burden.

[Read: How to Achieve Financial Goals With No to Low Debt]

You must ensure to maintain a debt-to-income ratio below 40% and focus on debt reduction and management strategies like Snowball or Avalanche Methods. This will help you to maintain your financial well-being, build a wealthy corpus as you will have more surplus to invest and prevent you from any debt stress.

Step #5 Self-actualisation

The last layer of your financial pyramid is the stage where you need to focus on your financial well-being. In this stage, as per Maslow's Theory, one needs to look after self-fulfilment, seek personal growth, and peak experiences.

Remember that sticking to your personalised financial plan in the face of market volatilities and friendly yet ill-informed advice is a test you have to successfully withstand. Correspondingly, staying and increasing your investments, not just monetarily, but also by improving your financial knowledge so that you can be comfortably off, both financially and in terms of expertise.

As we celebrate the birth of Lord Krishna, his sagacity and brilliance, not diving into the epitome detailing his magnificence as he counselled a confused and distressed, yet fiercely brave warrior hero Arjun on the battlefield, as he faced his kin during the war in Mahabharat would be remiss.

Janmashtami is the ideal time for you to smash the proverbial Handi and begin your financial journey. Many individuals seek to attain their financial goals but fail due to poor 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 stop you from investing in unworthy schemes.

To conclude...

You see, by integrating Lord Krishna's teachings into financial practices, one can navigate the realm of money, wisdom, integrity, and a deeper understanding of the interconnectedness of life. Additionally, Dahi Handi teaches us that achieving our goals in life requires a lot of practice, concentration, and coordination. The aforementioned financial pyramid can be utilised as a framework and can be useful to determine at which stage you are currently standing.

This Janmashtami, discover your financial journey and lead towards the path of achieving your financial goals.

Wishing you all a very Happy Janmashtami!

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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
 

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This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.