Conquer Your Financial Demons This Dussehra

Dussehra, the festival that symbolises the triumph of good over evil, is a powerful reminder of the importance of eliminating the negative forces in our lives. As Ravana’s statue burns, it marks the end of evil, and similarly, we can symbolically burn away our financial vices. This Dussehra, it’s time to confront your financial demons, take control of your money, and set yourself on a path toward financial victory.

Dussehra: How to Slay Financial Demons

Your finances can be impacted by a lack of discipline or in the face of adversity. But with sound planning and self-discipline, you can regain control of your finances. Financial planning is like a strategic journey that requires careful planning, patience, and consistent effort to achieve your goals. Here are key financial demons that you should watch out for and conquer.

• Not building an emergency fund

Failing to build an emergency fund is one of the biggest financial mistakes. Life is unpredictable. An adequate emergency fund can help you avoid taking out high-interest loans to meet unforeseen circumstances such as medical emergencies, job loss, or urgent repairs.

Ideally, you should save enough to cover 6-12 months’ worth of expenses.

• Spending without a budget

One of the biggest financial demons is not planning your budget. Without a clear plan, it’s easy to overspend and lose track of your money. Budgeting helps you identify essential expenses, like groceries, utility bills, and loan repayments and gives you control over non-essential spending such as dining out or shopping.

A well-crafted budget not only helps you keep tabs on your monthly spending but also ensures you allocate funds for important financial obligations, such as savings and investments. This Dussehra, vow to create and stick to a monthly budget.

• Spending first and investing later

Spending before investing is a major financial mistake. Investing should be a priority, not an afterthought. Neglecting it risks your future and hinders wealth growth. Prioritise investing in your budget to secure long-term financial stability and build wealth efficiently.

• Considering savings as investing

Saving is often misunderstood as investing; however, they are different. Savings are for short-term goals and often carry low risk, while investments are for medium—and long-term goals that have higher risks but also the potential for higher returns. Ultimately, investing can help you grow your wealth.

Let’s say you save 20% of your monthly income, that is, ₹20,000, in a savings account that offers interest at 5% p.a., your savings will grow by a mere ₹1,000. However, if you invest the same in an avenue that has offered an average of 12% p.a. over the last 10 years, your investment could grow by ₹2,400 in a year, ₹8,099 in 3 years, and ₹15,247 in 5 years.

Therefore, it is essential to have ample short-term savings and to invest in the medium and long term. 

• Neglecting loan repayments

Outstanding loans can weigh heavily on your financial health, especially if you’re only making the minimum payments or, worse, skipping payments altogether. Late or missed payments not only attract hefty penalties but also harm your credit score, making future borrowing more expensive and difficult.

If you have not been repaying your debt regularly, pledge to do so this Dussehra. Prioritise high-interest loans like credit cards and ensure you’re paying more than the minimum due. One way to make sure you never forget a deadline is to automate your credit card payments.

Conclusion

Dussehra reminds us that good triumphs over evil, and this year, let it inspire you to conquer your financial demons. Regularly reviewing your financial progress, much like health check-ups, keeps you on track and helps adjust your budget. Though battling poor financial habits may feel overwhelming, it can be conquered with discipline and smart planning. Make it your mission to embrace smart financial habits and secure lasting financial stability.