Overthrow Your Financial Evils This Dussehra
Oct 17, 2018

Author: Rounaq Neroy

Among India’s many religious festivals, Dussehra or Vijayadashami, based on the Ramayana, is celebrated to the victory of good over evil, Rama over Ravana.

Ravana effigies
(Image source: flickr.com)

A common sight is people thronging the streets with alacrity and burning Ravana’s effigies.  It is considered to be an auspicious day to start a new venture, project, or take on a new journey.  

This Dussehra, take a pledge to triumph over your inner demons before they jeopardise your financial wellbeing.

Gain control over spending hard-earned money – Engage in a prudent budgeting exercise and keep track of cash inflow and outflows.

In the age of plastic, debit and credit cards are swiped habitually. Debit card and credit cards are not a bad thing if you use them sensibly and smartly.

Be cognizant of the various transaction charges you are paying while using your credit cards and debit cards, or even when transacting online.  If you are spendthrift, prefer a debit card over a credit card; perhaps this will help you curtail certain frivolous expenses.

Also, to have better control over your personal finances, keep a track of your statements/account balances regularly and review your cash inflows and outflows.

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Likewise when you invest, regularly review your portfolio to ensure that you’re on track in the journey of wealth creation and accomplishing financial goals.

Begin to save enough for the future – Legendary investor, Warren Buffett has aptly said, “Don’t save what is left after spending, but spend what is left after saving.”

Sure, we all have aspirations to live a better life and provide our families with the best. And amidst the atmosphere of consumerism, materialism and competition, we understand that it is hard to abstain.

But do note that if you only chase short-term gratification, you could be compromising on your vital financial goals viz. your children’s higher education needs, their wedding expenses, and your retirement among a host of other financial goals, and may jeopardize your financial security. So, avoid living from paycheck-to-paycheck with meagre savings.

The first step to your financial freedom is to save. And the next step is to invest that money sensibly in wealth-creating investment avenues so that you counter inflation, accomplish the envisioned financial goals.

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Avoid creating a mountain of debt – You may borrow money for specific purposes such as to purchase a car, a property, for higher education needs, or even for any personal reasons; but make sure you follow a prudent approach.

If you have been borrowing continually to pay one debt with another, it could create a mountain of debt that can endanger your and your family’s long-term financial well-being.  So, recognise the means to service the debt obligations before you borrow ––bite only as much you can chew or it could become the Ravana of your financial health.

Remember, loans and financial obligations must always be taken seriously and repaid in due time, as any default on the payments can harm your credit rating and ability to seek loans in the future.

Make an attempt to raise your low credit score – When you approach lenders/banks for various types of loans, they first access your credit score to assess your creditworthiness and credit behaviour. If your credit score is low, it would limit your access to a loan when you need it the most.

So, make a genuine effort to improve your credit score. Ideally, your credit score should be at least 750 and above at most times.

[Read:  Everything You Need To Know About Credit Score]

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

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

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.

[Read: How To Build A Rainy Day Fund]

Ideally, you must maintain at least 6 to 24 months of living expenses, including EMIs as your emergency fund in a savings bank account or an overnight fund or a liquid fund.

You may add a little 5%-10% extra for medical emergencies ascertaining your health insurance coverage and medical record of you and your family members. While doing that although big is better; holding a very large portion as a contingency reserve is also not sensible, particularly when you have other financial goals to address.

Therefore, holding an optimal amount as a contingency reserve and reviewing it regularly taking cognisance of the dynamic events in life is necessary.

Engage in a sensible money talk with family – Have you felt the hesitation about having that tough conversation regarding money at home? Are you looking for ways to discuss this with your spouse, but haven’t found a way yet?

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.

[Read: How I Helped My Wife To Invest In Mutual Funds]

Money symbolizes different things to different people. For example, power, freedom, love, sense of security, boosts self-esteem, etc.  Getting a perspective of your family members can help you when planning for life goals and taking financial decisions.

Pay attention to your financial literacy – Robert Kiyosaki has beautifully said, “Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.”

In the age of knowledge economy that we live in, aim to take some time off your schedule to be a financial literate in order to handle your personal finances astutely.

Our education system teaches us to work for money but sadly it keeps us ignorant of how to earn and manage money to create wealth. Besides, some of us are from non-finance backgrounds.

To conclude…

This Dussehra, make a new beginning and march ahead to a lead a healthy financial future. Correct your bad financial habits in the interest of your long-term financial well-being.

Take the right steps and pledge to start your journey of wealth creation and achieving financial goals this Dussehra.

You may seek seeking professional guidance from PersonalFN, a SEBI registered investment adviser. Reach out to PersonalFN’s Financial Guardians, on 022-61361200 or write to info@personalfn.com. You may also fill in this form, and soon our experienced financial planners will reach out to you.

Wish you a Very Happy Dussehra!

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