The festive season is usually a time when most of us plan major purchases – be it replacing that old sofa or buying that new smartphone you’ve been eyeing for months.
Retailers also know this and flood your inboxes with offers. Major online shopping sites, too, run festive sales during the time. And with the festive spirit, it’s easy to get carried away and overspend.
Here are five things to keep in mind, which will help you spend judiciously, while treating yourself during this festive season.
Make a festive budget: Before you start spending, it is important that your set aside a portion of your money for festive shopping. Decide on an amount that you can comfortably spare after your monthly expenses and investments. Don’t exceed this limit and you’ll avoid regret in the future. As a rule of thumb, your festive budget shouldn’t exceed 50% of your monthly income.
Prioritise your purchases: Once you decide on a budget for your festive shopping, you should make a list of the things you really need. List them in the order of most to least important. Buy only those things that are on the top of the list, and which fit within your budget.
Track your spending: It’s easy to get carried away and overshoot your budget if you don’t track your spending. You can list all your purchases on a sheet of paper or use one of the several expense tracking apps available. This will help you avoid unnecessary spending.
Avoid unnecessary borrowing: As far as possible, spend only from the money that is actually in your account. Wherever it is necessary to take a loan (e.g. for large purchases like appliances and furniture), make sure to include the interest payable also into your budget. Also, avoid taking unnecessary loans to prevent falling into a debt trap in the future. When using credit cards, pay back the total amount due after the interest-free credit period.
Don’t skip your monthly SIPs: This is perhaps the most important piece of advice in this list. During the festive season, it’s tempting to cut back on investments and divert that money towards spending. However, one should only spend after setting aside money for investments. Regular investment is the key to long-term wealth creation and achieving your financial goals. Continue your regular investments as per schedule. If possible, increase your investment during the festive season by making a one-time investment into mutual funds, stocks or gold.
Hope these tips help you manage your money smartly during this festive season. Happy shopping and happy saving!