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This Diwali, light up your personal finances by following these steps

As part of Diwali cleaning, you must also take stock of your financial current situation and clear the clutter in your portfolio

November 01, 2021 / 10:28 AM IST
(Photo courtesy Bombay Sweet Shop)

(Photo courtesy Bombay Sweet Shop)

For most of us, Diwali spells joy, laughter, togetherness and gratitude. With the festival being just round the corner, last-minute preparations must be on at a frenzied pace to ensure that nothing is left to chance and another Diwali goes by joyously, adding to beautiful memories.

Every festival comes with its own set of rituals. We worship Goddess Lakshmi during Diwali.  Lakshmi is the Goddess of wealth and ushers in prosperity and wealth. It is very interesting   to see how some of these rituals lend themselves to financial well-being and wealth building. Let’s look at some of the rituals from this perspective. The various activities one does are cleaning, choosing appropriate gifts, preparing a wide range of sweets and savories to delight every member of the family, and lighting and decorations to usher in the festive spirit.

Prepare and plan

Preparations for Diwali start many days in advance, sometimes from even a month earlier. It is not something which one can wake up to a couple of days before Diwali and still have the same experience.

When you look at a festival as a part of the larger scheme of things, while it brings joy and well-being, it is not really a make-or-break event. If you miss celebrating one year, you can always let go and look forward to the next one. Given this context, if one puts in so much effort for a festival to plan everything to perfection, imagine how much effort and planning one should put in towards a must-do activity such as your personal finances, in order to ensure one enjoys financial stability and security throughout one’s life.

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Ad-hoc investments, investing without a goal, not giving your personal finance the time it deserves, are all indicators of lack of planning and preparedness, the consequences of which can never be pleasant.

Clean meticulously

While all of us clean and dust our house on a day-to-day basis, Diwali cleaning takes it to another level. One takes time out every year to clean every nook and cranny. Nothing is left untouched. It is also the time of the year when you discard things that you have outgrown or don’t see much use for.  If there is a strong emotional attachment, you keep it with a strong intent to dispose it off next year, if you manage not to use it through the year.

A good place to start with personal finances is to take stock of your current situation. Note down every asset and liability that you have. Once you do this, it’s important to see how they stack up against your goals. As with material things, we sometimes take hasty decisions with financial products, whether it is the policy that you purchased since you couldn’t figure out how to say no politely to your cousin or the holiday home you bought after a particularly good holiday. It is important to see what works in favour of your plan currently.  If it doesn’t make sense anymore, repurpose those investments.

Choose with care

Gifting takes a lot of planning; you normally list down the people and categorize the kind of gifts and sweets that are suitable for each of them. Homemade sweets for family, gift hampers that are well-packaged for colleagues, and utility items and sweets which last long for house help and staff.

Your portfolio requires the same approach – different goals require different asset classes. Short-term goals are best served with debt, long-term targets with equity, real estate for own use and gold as a hedge; don’t lose sight of these pointers.

Ensure you are well-diversified

Imagine that your favourite sweet is Kaju Katli. Would you consider having only one sweet for Diwali, and not adding a few options for someone who may not necessarily be fond of it? For that matter, would you just go with lights, since you like them, and ignore other elements of celebration such as food, rangoli, flowers, crackers and gifts? No, right? In order to enjoy the festival in all its glory, you need a bit of everything. Approach your assets similarly.

We often come across people who have had very a good run with a real estate investment and want to put a disproportionate part of their corpus in this one asset class. While the previous point was about choosing horses for the courses, this one is about ensuring your overall portfolio is well-balanced and not skewed either by past good experience or by the flavour of the season.

Now, in the days gone by, all these activities were undertaken by you alone. Today, with a busy schedule, we do not think twice about engaging a professional service for deep cleaning or flower decoration. We buy our sweets & savouries ready-made.  Homemade need not necessarily mean it is made at your home or by you – an aunty in the neighbourhood who specializes in cooking traditional stuff may be your go-to person.

After all, nobody cares how you managed to put together a beautiful experience.

You don’t get brownie points for DIY. Same is the case with your finances – if you are successful and busy, it makes so much sense to take the help of a professional.

So, this Diwali, take a leaf from your festival routine and spruce up your personal finances!
Prathiba Girish is a Certified Financial Planner and Founder of Finwise Personal Finance Solutions
first published: Nov 1, 2021 10:28 am
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