The four pillars of good health are said to be physical, emotional, spiritual and financial wellbeing. Learning how to handle finances is not necessarily an intuitive exercise but rather involves understanding a lot of guiding principles. Leveraging these can give us what we seek financially and help us live the life that we dream of. This is true all the way from early working life to retirement. Financial planning is therefore a cornerstone for a fulfilling life.

Our ancestors meditated for years to figure and perfect the right way of living through reflection and self-discipline. Is there a similar approach for creating financial wellbeing and cutting through the clutter of excessive financial information? The answer lies below.

Mantra 1: Know your life stage

Our scriptures have defined certain ages for certain activities. Till 20, one is supposed to be a student. Between 20 and 60, a householder. After 60, one is meant to devote time to spirituality and charitable causes. If you are in the 20-60 age bracket, your primary need is of saving, creating and maintaining wealth. If you are above 60, your primary need is the preservation of financial resources. The strategy changes according to your life stage.

Mantra 2: Have focused goals

In today's ever-changing world, your focus needs to be like Arjuna, the famed archer of Mahabharata. When asked by his guru what he saw, he said - "only the bird’s eye". His arrow successfully struck the eye of the wooden bird. When asked about their financial goals, many people give a very vague answer. This is why most of them never become rich! A clear focus is essential for success in any endeavour. Normally, most people approach the finances with the formula: "Income -Expenses =Savings". Instead, the financially savvy look at Income - Savings = Expenses.

Mantra 3: Harness the power of compounding

Most of us overestimate the short run and underestimate the long run as far as equities go. Imagine someone is going from Mumbai to Pune on a bicycle and someone is going by a car or bike. The person travelling by a car or bike will reach in 3 hours, and the person travelling on his bicycle will reach in 10-12 hours. Most of us who prefer fixed income instruments and pay as per our tax slab are in that category of the cyclist. For instance, let us say somebody invested INR 1 lakh now in a fixed deposit, the result after ten years post taxes is INR 1,69,000 and the same amount over ten years in an equity/balanced fund will be roughly INR 4 lakh, as per last ten years performance.

Mantra 4: Have a clearly defined asset allocation

When one sees any cricket team, it is a mix of batsmen, bowlers and fielders. Similarly, your portfolio also needs to be structured this way. Most people move their thought process in favour of certain asset classes, basis their preferences. For example: in our country, we have an extreme affinity for real estate and gold. The portfolio needs to be a blend of debt & equity to help you achieve your financial goals in a timely manner; just as our Indian team had Rahul Dravid, known for his consistency and technique, as well as Sachin Tendulkar who was a balance of aggression and solidity. This will help traverse market cycles relatively unruffled.

Mantra 5: Break down your goals into short, medium and long-term goals

Let us define the way time horizons are interpreted.

1)    Short term - less than 1 year. Eg: emergency expenses of up to 1 year

2)    Medium term - between 1-3 years. Eg: buying a car, making a down payment for a house

3)    Long term - 5 years and above. Eg: retirement, children's education, philanthropy

Mantra 6: Have an advisor

You are a specialist in your chosen occupation/business. Would you like to make decisions without proper information? The answer is no. The average individual is unlikely to possess better investment related insights than a person who tracks investments full time. Engaging a trustworthy, qualified advisor usually produces better outcomes, on account of lesser mistakes. Therefore, it is advisable to have an advisor who acts as a coach, and helps you improve your financial decisions

Follow these time-tested mantras to achieve financial wellbeing.

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