Conquer your 10 Financial Vices this Dusshera
Oct 07, 2019

Author: Aditi Murkute

Conquer your 10 Financial Vices this Dusshera
(Image source: freepik.com)

In one of my previous articles of 9 money management lessons from Navratri, I explained the significance of the festival and how we can relate each aspect of the festival to effective money management techniques. If you recall, at the end of the article I mentioned that one of the most auspicious festivals is 'Vijayadashami/Dussehra'.

Today I will explain further about Vijayadashami or Dusshera and some important lessons we can incorporate to conquer some of our financial ill habits for our financial wellbeing.

Vijayadashami as per Devanagari script is a combination of two words "Vijaya" (victory) and "Dashami" (tenth), connoting the festival on the tenth day celebrating the victory of good over evil.

dushera
(Image source: freepik.com)
 

As per the mythology, there are three legends associated with it and celebrated accordingly in various parts of the country-

  • Marks the end of Durga Puja, in honour of Goddess Durga's victory over the buffalo demon Mahishasura to restore and protect dharma.

  • Marks the end of "Ramlila" and portrays Lord Rama's victory over the ten-headed evil King Ravana by burning his effigies and preparation of Diwali celebration.

  • As per Mahabharata, it marks the celebration of Arjuna's single-handed victory of decimating one lakh+ soldiers and defeated all Kuru warriors.

In all the three instances the main underlying theme is the commemoration of the triumph of good over evil and for new beginnings by conquering all ill (habits).

Hence Vijayadashami or Dussehra is also a time for self-introspection to identify our own vices and take steps to conquer them. Similarly, in terms of money management habits too, we have certain bad habits that if left unchecked over time can prove to be a hindrance to leading a prosperous life.

Here are some of the pertinent financial ill habits we may have and how to surmount them...

  1. Mirroring the investment portfolio of a friend, colleague, neighbour, or a family member

    The most common financial ill habit I have come across is people take investment advice from a friend, family, next-door neighbour or someone else, without recognising whether these individuals are competent enough to render such advice. Likewise, blindly aping someone's investment portfolio.

    These are serious mistakes; because investing is an individualistic exercise since each person is different, with different life goals, wants, and needs. So, it should never be done as per your friend, family (parents or siblings), colleague, or your neighbour.

    Although the aspirations of a big house, dream car, wedding, etc. are similar to every individual, each one has different circumstances and capacities at different times in their life. Hence you must consider every aspect and formulate a personalised investment approach and preference when you think of making investments.

  2. Investing without a goal

    When you travel, you don't just pick your bag and step out aimlessly without having a destination in mind. Do you? Likewise, you should not invest in an ad-hoc manner.

    Similarly, when you invest you ought to have financial goals in mind. Your financial goals need to be S.M.A.R.T. Meaning, they need to be: Specific, Measurable, Adjustable, Realistic, and Time-bound.

    And once you do that, you need to engage in prudent investment planning exercise recognising your risk profile, the investment objective, the financial goals you wish to address, and the time horizon in hand to achieve the goals.

  3. Mindlessly spending

    Your overall financial health comprises of many elements, from learning how to live within a budget, controlling debt & excessive spending, to building a good credit history, planning for short & long-term financial goals, and learning how to invest. It's a lot to put your arms around.

    However, if you have been working for more than a couple of years and still live from paycheck-to-paycheck with meagre savings, facing this demon is critical to your financial wellbeing.

    In this world of materialism and instant gratification, we tend to fall for various deals and offers -- even avail of loans or excessively use credit cards to fulfil certain wants. This, in turn, leads to debt overburden and we end up saving less and not investing enough or at all.

    That said, you can curb excessive spending habit by engaging in a prudent budgeting exercise, whereby the focus will be on saving your hard-earned money first. This will help you save more, leaving you with a better investible surplus to address certain vital long-term financial goals.

    "Don't save what is left after spending but spend what is left after savings." - Warren Buffett.

    The first step to your financial freedom is to save.

  4. Ignoring asset allocation while investing

    As per Ramayana, Lord Rama and his allies had created a strategy to win the battle against King Ravana. Similarly, if you want to accomplish the envisioned financial goals, devising an investment strategy is necessary.

    Asset allocation, which works on principles of putting eggs in various baskets, is an investment strategy in itself that helps you craft a  well-diversified portfolio of various asset classes (equity, debt, and gold) and investment avenues therein, whereby your investment risk is reduced while you endeavour to beat inflation and accomplish financial goals.

    A strategically created investment portfolio with a holistic view and having a long-term approach helps to maintain and grow wealth and avoids any extreme downside risk of loss.

  5. Losing focus on your goals

    As per the three legends, each one Goddess Durga, Lord Rama and Arjuna focused only on one thing of defeating their opponent for the greater good.

    Likewise, as an investor, you should always focus on your individual goal-based investment plan. If you give in to your emotions of greed, fear, and the noise of the herd, you will lose out on your long-term gains of a bright and blissful future.

  6. Not discussing finances with family members

    You see, when you have responsibilities to shoulder at home, a sensible money talk with family members is important; after all, it's a question of the family's financial future. Avoiding a financial discussion with your family members can be a grave mistake as they may provide valuable insights that you would miss out on.

    Besides, we invest to secure our family's future, so in case of our absence, they should be aware of the investments to pool out money from in case of emergencies or to make claims.

    Hence involve your family members to seek their views and see how best a collective effort can be made.

  7. Not holding an optimal insurance cover

    Given the lifestyle that we lead today, with erratic eating, long work hours, etc., most of us ignore our health. And due to that, health issues have been gripping many people, even at a young age and as age progresses. Further, the cost of medical treatment, as you know is huge.

    Hence, make sure you've optimally insured yourself for both, life and health. The purpose of insurance is indemnification of risk from an untoward event. As far as possible, do not merge your insurance and investment instruments, keep them separate. For life insurance, consider a term plan, and for health insurance needs a medi-claim policy with worthy features, as medical inflation is skyrocketing.

    Also, this Dussehra, while you may indulge in sweets and savouries of the festive season, do ensure that you practice some healthy exercise and insure yourself optimally.

  8. Not creating an emergency fund

    In life, we cannot ignore the nasty surprises or any other emergencies like loss of a job, hospitalization, unexpected increase in your child's school fees, etc., that can arise at any moment. They leave you high and dry if not prepared for it.

    Hence, it is advisable to set aside about 12 months of your regular expenses including EMIs in a savings bank account and/or you can also opt for a sweep in account, Flexi deposit, liquid funds or overnight funds if you desire a better rate of return.

    Many people do not maintain a contingency fund and undergo both financial and emotional trauma during harsh or extraordinary circumstances.

  9. Not reviewing your investment portfolio

    Kumbhakaran, prone for his sleepiness didn't wake up in time, sealed the defeat of Ravana in the battle. Similarly, while you invest for the long-term, you cannot afford to buy and forget if you wish to accomplish your envisioned goals.

    If you want to be a winner in terms of accumulating wealth, you need to track and review your investment portfolio to see if its performance is aiding your journey of wealth creation and you are on track to achieve the envisioned financial goals.

    Hence, evaluate your portfolio on a regular basis while you are patient enough. It is important to weed out underperforming investments and those that do not align very well with the financial goals you need to accomplish. Plus, be aware of any new investment avenues, approach them with an open mind, do enough research before you form a view to invest, and efficiently adjust your portfolio. After that as well, keep track of any significant news that could impact your financial plan and investment portfolio.

  10. Not paying heed to sound advice

    As per Ramayana, Devi Sita, didn't heed to her brother-in-law's (Lakshmana) word of caution and crossed the Lakshmanrekha (a line drawn on the ground to mark territory) and got abducted by Ravana.

    Similarly, in order to be a good investor, one must be a good listener. A smart investor listens with ears wide open to sound financial advice only. When you ask relevant queries and listen to the advice of an ethical, unbiased, experienced, and research-backed financial adviser, you will make better investment decisions.

    Listening in conjugation with wisdom will enable you to filter and choose what is right for you. Keep in mind your requirements, aspirations, and desires in terms of your broader investment objective, financial goals you wish to achieve, your current financial standing, age, risk profile, and the number of years left for the completion of your goal.

Conclusion:

In today's time the Good (Lord Rama) and Evil (King Ravana) both reside within us and who we encourage becomes a part of our life as the first personality to defines our character.

So, remember, your life is your choice with the right steps taken for your better tomorrow. Take a pledge to correct your bad financial habits in the interest of your financial health this festive season. Along with the joy of cultural celebrations with family, for your self-improvement, knowing and seeking the right path, and knowledge is pivotal.

Improve your personal finances, make a new beginning, have a positive outlook, be focused, and illuminate the oil lamp of knowledge and wisdom that will brighten your long-term financial future.

Wish you a Very Happy Dussehra!

PS: If you are serious about investing in rewarding mutual fund schemes, consider  PersonalFN's flagship Unbiased Mutual Fund Research service- Fundselect.

It is a credible research service that provides insightful guidance and recommendations on equity funds and debt schemes every month --- the ones to Buy, Hold, or Sell.


 

Click here to subscribe to Fundselect!



Add Comments

Comments
smmundle@gmail.com
Oct 07, 2019

Thanks for a very nice article. It will be very helpful for financial planning. Sound advice.
smmundle@gmail.com
Oct 07, 2019

Thanks for a very nice article. It will be very helpful for financial planning. Sound advice.
 1