How to plan your finances this festive season

Every year, as the festive season approaches, you may feel a sense of elation as well as apprehension. The former because like most people, you too love shopping. The latter since you end up overspending without even realising how much has been overspent.  
 
During the ongoing festive season, some prudent practices and down-to-earth decisions could help you enjoy without any angst. You probably held back on spending last year due to pandemic-related constraints but you should avoid revenge spending as this will only rebound on you in the weeks ahead.  
 
To begin with, if you have limited resources but still need to spend on gifts and similar items, look up the festival offers from both new age and traditional financing entities. 

Customised financing options could allow you to buy products at zero-cost EMIs. BNPL (buy now pay later) products are also another avenue for festive spending. Through these offerings, you can buy goods without exhausting your savings.
 
Nevertheless, you must keep some important points in mind to maintain financial stability.

Also Read: 60% of Indian households ready to spend during festive season; budget, safety key criteria: Survey

Below are eight useful tips that will be beneficial across all festive seasons. 
 
1. Compare diverse finance offerings: Given the multiplicity of offerings in the market, it's prudent to compare the different ones and see what is best for you. Check the percentage of down payment you need to pay, the interest rates, the loan tenure and whether any processing fees are being charged, among others. Such queries will ascertain there are no hidden charges to inflate the cost of the final offering.  
 
2. Buy within your means: During festivals, people sometimes find it difficult to resist deals saying, 'Flat 50% off' and suchlike. Nonetheless, your priority is to decide what you need or will be useful for gifting. Only thereafter should you consider the different deals available. If something is available for a bargain but is inappropriate for gifting, it simply erodes your spending power without benefitting you. Moreover, you could end up in debt that may take some time to clear. 
 
3. Draw up a festival budget: Decide beforehand how much you need to spend for each festival. Note the expenses on decorations, gifts, food and beverages, travel spends (if any), to name a few. Once your budget is decided, curb any excess or unwanted expenses that will end up in overshooting these limits. For example, if a lovely gift is running over budget, drop it and choose a more cost-effective option, if possible, in the same category.

4. Note all expenses: A budget without recorded expenses will only be good on paper. Therefore, big or small, keep track of every expense. Each week or at every stage, you will have a fair idea of the balance spending amount. The remainder can then be used more judiciously for pending and priority things. Without recording spends, you may end up exhausting your funds while crucial items are yet to be purchased.  
 
5. Avoid unplanned or impulsive shopping: When visiting malls or markets, the amazing discounts may sometimes tempt you to buy products that seem great but have little utility or gifting value. In all such situations, only buy what you need and forgo what you want. Needs, not wants, must be your overriding motto.

Also Read: Toshiba Home Appliances upbeat on India; expects 40% sales during the festive season
 
6. Choose your spending mode wisely: Don't be tempted into thinking you can use all your credit cards to get through this festive season. While there may be many irresistible deals on credit cards, remember that you could overshoot your budget within days. What's more, credit card spending attracts very high-interest rates if not cleared within the upcoming billing cycle. Accordingly, avoid using credit cards wherever possible. Instead, check for debit card payment offers that will limit the scope of running up unplanned debt. Additionally, if you opt for an EMI facility on major spends, whether through debit or credit cards, do check the relevant charges before doing so.  
 
7. Buy online during seasonal sales: E-commerce sites offer deals and discounts many times during the year, not just during festivals. If the products on sale come with genuine discounts and have a return policy too, you could purchase gifts and utility items online at better discounts than those of offline outlets. Besides buying the same gifts at lower costs than offline, you will also save on the time and energy spent visiting brick-and-mortar stores.  
 
8. Begin saving this year for the next festive season: Saving a specific amount or some percentage of your salary every month will help you build a reasonable corpus for festive shopping next year. While shopping and spending are the prime pillars of festive fervour, adding savings to it will make sure you have adequate liquidity during next year's festivities. Short-term investment options could help you augment your savings with some annual interest. Check what suits you best to make monthly festive savings an annual habit.  
 
If you adhere to the above tips along with the requisite discipline, the annual festive feeling will be full of cheer and devoid of the apprehensions of overspending and debt you encounter each year. 
 
(The writer is the CEO & Founder, mPokket.)