There are two legends associated with this festival. First, according to ancient Hindu mythology, there is a story about the 16 year old son of King Hima. It is believed that his horoscope predicted that he would die of a snake bite on the fourth day his marriage. So, in order to save his life, on that particular day, his newlywed wife put all her ornaments and jewelleries in a heap at the entrance of the sleeping chamber and lit lamps all over the place. She prevented him from falling asleep by narrating stories and singing hymns. Next day, when the God of Death, Yama came disguised as a serpent, his eyes were dazzled by the lighting of the lamps, so he could not enter the Prince's chamber. So, he climbed the heap of ornaments and sat there the entire night listening to stories and songs. In the morning, he silently went away and the life of young Prince was saved. Thus, this day came to be celebrated as Dhan Teras. The following day came to be known as Naraka Chaturdashi or Yaamadeepdan as women keep burning the lighted lamps or 'diyas' the whole night to glorify Yama, the God of Death.
Another legend says that when the demons and the gods were fighting in the ocean for 'amrit' or nectar, Dhanavantri, the physician of gods and the incarnation of Lord Vishnu appeared from beneath the ocean with a medicinal potion or elixir. Thus, according to this myth, the word Dhanteras comes from the word, Dhanavantri, the divine doctor.
On this special day, people keep the houses clean and decorate the main entrances of the houses and offices with beautiful 'rangolis' or flower decorations. Small foot prints are drawn using rice flour and vermilion powder to indicate the arrival of Goddess of Wealth. During this festival season, houses and streets are illuminated with various colorful lights, especially houses to welcome the Goddess of Wealth. Gold and ornaments are offered to the Goddess and extensive Puja is performed to drive away evil spirits. Devotional songs, flowers and sweets are offered to Goddess and gold ornaments as well as gold and silvers articles are bought today, as Dhanteras is marked to be auspicious day. So, many people do a lot of shopping buying new clothes and ornaments. In villages, people also worship cattles and cows, as they are the main source of their income.
Thus, Dhan Teras is one of the most significant festivals in India.