New clothes, sharing sweets, bursting crackers and lighting up our homes – The Diwali mode is on! But are you aware that the festival of lights also provides productive financial lessons?
1. Safety First
When it comes to bursting crackers, parents instruct their kids to stay safe for avoiding any mishaps. Similarly, in our life, we should adopt caution as a risk management practice with the help of Life insurance.
Most of the millennials ignore the fact that insurance cover, while they’re young, is more rewarding as compared to when they’re nearing retirement. During the accumulation phase (25-40 years of age), the necessity of Life insurance and Term Plan is high because they usually people do not have substantial savings. In case of an unfortunate event such as death, the insurance procced is available to take care of the financial needs of the family. It is also to be noted that premiums are usually low at early entry age.
2. Future planning
Diwali is the most awaited festival for Indian families, who plan their spending – clothes, vehicles, gifts – throughout the year. However, most of us fail to carry the same when it comes to managing our finances. Often, millennials fail to use the benefits of planning their finances early in life and they end up losing more money later in life. The money that is lost at a later age is usually in the form of low compounding benefits or higher premiums due to delay in getting Life insurance and Term Plan.
3. Putting the balance sheet in order
Diwali is the time when people clean their homes, it is also the right time to put your balance sheet in the order balance sheet in order. In Diwali, some of us end up with huge Diwali expenses and eventually end up with a huge personal loan or debt on your credit cards. Instead, try planning next year Diwali with a small SIP (Systematic Investment Plan) in a debt fund. It would ensure that next year you don’t seek debt for all your Diwali expenses.
4. Goal-based investments
At the time of Diwali, people buy gifts for relatives and friends based on their age group or taste so likewise the investments should be based on your various financial goals. You should categorize your goals such as buying a house, child’s education, buying a car or a vacation abroad. Your every goal will have certain timelines and the resources you need to invest in achieving the same. You should plan all financial decisions based on all your goals to ensure that you have the adequate funds available when you need it.
5. Variety is rewarding
Diwali is the time when you buy new clothes, various sweets, crackers, and several decorative materials to celebrate the occasion of Diwali likewise you should bring diversity in your portfolio as well. Diversification in your portfolio will allow you to enjoy several benefits that require different financial instruments. With this, you also reduce the risk within your portfolio. With a balanced portfolio, you’ll be able to vary the risk levels.
6. Strong Commitments
The festival of Diwali is a reminder that commitment and good ideas always triumph in the longer run. If you invest in Online term plan, good funds, FDs, etc. for the long run, it’s going to create wealth for in the long run. Wealth creation can only begin from your side and Diwali festivities are the right time to start this financial exercise in the long run.
The Bottom Line
A strong financial plan includes crucial factors such as safety, planning, diversification, and commitment. This Diwali maximizes your celebrations with proper financial planning that would enable you to have a safe and secure future.
Wishing you and your family a happy, safe and prosperous Diwali!