The festive season is here. So, while you gear up to soak all the fun and festivity, not keeping a tab on your spending habits could put you in a bit of a financial mess. In fact, there is always the danger of overspending or spending excessively during the festive season.
So, here are some ways in which you can manage your finances wisely this festive season.
Set a budget in advance: It is always advisable to set apart a budget, so that you can allocate a dedicated amount of fund for the festive season.
“Always have a budget. We recommend creating an annual budget that will have enough allowance for the festivities. This expense then does not need to come from the month’s salary, but rather the annual expense fund that is created for all the discretionary spends,” says Renu Maheswari, a Sebi-registered investment advisor, and chief executive officer and principal advisor, Finzscholarz Wealth Manager.
She says that an annual budgeting process also gives allowance for some variance from the budget.
“We recommend not exceeding the annual budget for discretionary spends, in any case. This discipline goes a long way in providing peaceful, guilt-free pleasures from money,” says Maheshwari.
Make a list of expenses: The festive season comes with a lot of additional expenses. There are things you need to buy for the home, gifts you need to purchase for friends and family, and expenses that you need to incur for eating out, and so on.
So, when you prepare the budget, each and every expense, however small, should be accounted for. When you list down all the items and make a budget, you will have an idea whether you can afford to spend on all of those or whether you need to cut down on anything.
Do not use credit: It is preferable that you do not buy on credit. Maheshwari suggests keeping a record of all the purchases being made to ensure that you do not go over the budget. So, if you are spending amount X on your credit card, ensure that you have Rs X saved in your account that you can use to pay the credit card bills when the due date comes, or even earlier.
“Credit cards should be used as plastic money, not really as credit. Whatever spends are made on the card should not be unaccounted for,” says Maheshwari.
During this period there are a host of personal loan offers available for buying appliances, gadgets, and pretty much anything else. Like credit card financing, personal loans should be the last resort when making any purchases. Remember, even zero-equated monthly instalment (EMI) purchases need to be paid off in a regular manner, and failure to pay on time could land you in a debt trap.
Make use of offers and discounts: During the festive season, companies often come up with various offers for their customers. These could be in the form of heavy discounts, cash-back offers, zero-cost EMIs, free home deliveries, offers to exchange old items, and so on.
While you may make use of some of these, remember that they are a double-edged sword and should never be used to purchase things you do not need, however, attractive the offer may seem to be.
If you follow the above, the festive season would be more fun and less worrying about your finances.