5 money lessons to learn from the Dahi Handi event on Janmashtami
Janmashtami is a festival which is celebrated across India with a lot of zeal and devotion. And the most eye-catching aspect of this festival is the Dahi Handi event, which is done to enact the legend of Krishna stealing butter as a baby from a hanging pot. In this event, young men from the community form a human pyramid and attempt to reach out to a pot hanging high and break it. The pot often carries the prize money/reward for the participants. And, to be able to carry out this act successfully, the pyramid formation needs to be strong and strategic. Plenty on practice, focus and coordination go into it.
Parallels can be drawn to our financial planning, and inspiration from this pyramid formation can be taken to build our path to legacy. Everyone wants to attain a state of contentment when it comes to building wealth and live a financially trouble-free life. This requires a strategic step-by-step approach replicating a pyramid. Let’s look at the layers in detail:
1. Save: A sturdy foundation
You need to lay the groundwork of your financial planning first. Start saving as early as possible to form a strong base, which is essential to your financial pyramid, as the layers on top are to rest on the base. When you start saving early, you allow yourself a longer period to grow your wealth and the power of compounding works on your money. You can always start with a small amount. In fact, someone who started saving in his 20s with a small savings amount will fetch more return than someone who started saving in his 30s with a higher savings amount, assuming they both retire at 60. Also inculcating a habit of saving will help you tackle your tendency to splurge and bring you closer to meeting your financial goals.
2. Secure: Keep yourself and family safe from death and diseases
The next step would be to add a layer of financial security to beef up against emergencies such as a sudden health issue, job loss etc. A liquid emergency fund worth six months to one year of your income comes handy to replace momentary loss of income. In order to attain legacy, your financial path needs to be uninterrupted. You cannot let emergencies take a dip in your savings. You need term insurance and health insurance to secure your family and self from death and disease. Health insurance can help you cover the cost of healthcare, pre- and post-hospitalization, in case of a financial emergency. 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.
3. Savour: Discover yourself
When you have covered grounds for these two layers and yet you have time to be done with your debt tenure, savour your life with credit cards and personal loans to increase your happiness quotient. Gift yourself back something – like a holiday or a car. However, keep your affordability potential in mind. Have a repayment plan if you are taking loan and settle your EMIs in full.
4. Strengthen: Accumulate assets, clear debts, secure for retirement
Build wealth through investment in assets such as mutual funds, equity, real estate etc. Pick investments based on your return expectation and investment tenure. Take loans, if necessary, but clear them off in time. Loans are not always bad. A home loan increases your purchasing power at a point when buying a house may not be affordable. If you wait till you build a fund to be able to buy a house, the price of the house will go up by the time you put together a fund.
5. Serenity: Your legacy
This refers to the state wherein you have fulfilled your dreams, secured retirement, and built debt-free assets. It’s time for you to smash the proverbial Handi and enjoy your life’s rewards. If you have strived all your life to build wealth and clear off all debts, you will attain a peaceful retirement and pass off those debt-free assets to your children. You would also have a clean credit history.
1. Save: A sturdy foundation
You need to lay the groundwork of your financial planning first. Start saving as early as possible to form a strong base, which is essential to your financial pyramid, as the layers on top are to rest on the base. When you start saving early, you allow yourself a longer period to grow your wealth and the power of compounding works on your money. You can always start with a small amount. In fact, someone who started saving in his 20s with a small savings amount will fetch more return than someone who started saving in his 30s with a higher savings amount, assuming they both retire at 60. Also inculcating a habit of saving will help you tackle your tendency to splurge and bring you closer to meeting your financial goals.
2. Secure: Keep yourself and family safe from death and diseases
The next step would be to add a layer of financial security to beef up against emergencies such as a sudden health issue, job loss etc. A liquid emergency fund worth six months to one year of your income comes handy to replace momentary loss of income. In order to attain legacy, your financial path needs to be uninterrupted. You cannot let emergencies take a dip in your savings. You need term insurance and health insurance to secure your family and self from death and disease. Health insurance can help you cover the cost of healthcare, pre- and post-hospitalization, in case of a financial emergency. 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.
3. Savour: Discover yourself
When you have covered grounds for these two layers and yet you have time to be done with your debt tenure, savour your life with credit cards and personal loans to increase your happiness quotient. Gift yourself back something – like a holiday or a car. However, keep your affordability potential in mind. Have a repayment plan if you are taking loan and settle your EMIs in full.
4. Strengthen: Accumulate assets, clear debts, secure for retirement
Build wealth through investment in assets such as mutual funds, equity, real estate etc. Pick investments based on your return expectation and investment tenure. Take loans, if necessary, but clear them off in time. Loans are not always bad. A home loan increases your purchasing power at a point when buying a house may not be affordable. If you wait till you build a fund to be able to buy a house, the price of the house will go up by the time you put together a fund.
5. Serenity: Your legacy
This refers to the state wherein you have fulfilled your dreams, secured retirement, and built debt-free assets. It’s time for you to smash the proverbial Handi and enjoy your life’s rewards. If you have strived all your life to build wealth and clear off all debts, you will attain a peaceful retirement and pass off those debt-free assets to your children. You would also have a clean credit history.
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