Under King Mahabali’s rule, the people had a prosperous and egalitarian life. But the king was egoistic and boastful and therefore was condemned by Lord Vishnu as Vamana. He wished to see his people and Lord Vamana agreed that he could see them on the day of Thiruvonam star, which falls during the month of Chingam or Shravan or Bhadrapada, the day being celebrated as Onam festival.
The festival signifies the fact that all materialistic pleasures will dwindle but if the almighty wills it we can have whatever we want. Appeasing the Supreme God on the day of Onam, the day the king arrives to meet his people is a day of prosperity and happiness. By performing rituals on the day we can keep our wealth, riches and accomplishments intact and get the blessings of the lord for a lifetime.