5 Festive Season Tips: How to Spend Wisely and Keep Your Budget on Track

In the coming months, brands will make every effort to entice consumers with what appear to be deep discounts, and financial institutions will complement this with competitive loan offers. The second last quarter of the financial year has several festivals, including Navratri, Dusshera, Diwali and Christmas. The E-commerce portals and consumer brands will not miss out on the opportunity to get you to loosen your wallet strings.

Getting swept up in the excitement of festivals and vacations is a common occurrence, and overspending often becomes apparent when your credit card bills start to pile up. However, things can be different this time. With a prudent financial plan and a dose of financial discipline, you may experience the festivities without breaking or straining your budget.

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Prepare a budget as you start planning your festive shopping, and steer clear of debt traps like buy now, pay later or no-cost EMI schemes. On your part, you ought to focus on spending wisely in this festive season.

To help you celebrate a financially sensible festival season this year, PersonalFN has listed some tips that will assist you in spending prudently. Read on...

1. List Down the Necessary Festive Items

Instead of just shopping and splurging on unnecessary things, consider making a list of required items during the festive season.

Most people do not believe it is a necessary task; however, this list of items to be purchased is crucial to make you aware of your financial situation and plan your expenses accordingly. While you may cut down on unnecessary items, some cannot be eliminated from this list, such as grocery items to make special dishes during Diwali like 'Faral' (a popular Diwali delicacy across Maharashtra), sweets, desserts, etc., new clothes, gifts to family members and friends and so on.

Make sure that you make a detailed list. For instance, while making a list of gifts, include the names of the people you wish to buy gifts for. List any major purchases you are thinking of making during the festival sales, such as a new car, jewellery, appliances for the house, a down payment on a new house, etc.

By doing this, you may look for deals, plan your purchases, and avoid costly, expensive, last-minute impulse purchases.

2. Create a Festive Budget

As you begin searching for gifts, making plans for events, or redecorating your house, create a practical festive budget. Determine how much amount you can spend without straining your finances. You can allocate specific amounts for leisure, food, decorations, and gifts.

Allocating specific amounts for each category will help you stay on track and avoid impulsive spending. While taking advantage of festive sales and discounts may be tempting, you must prioritise making meaningful purchases and stick to your budget to avoid this.

Decide how much total amount you are willing to spend on the upcoming festivals. Your monthly income, outstanding debts, and other financial obligations should all be considered while creating your budget. Keeping a budget will enable you to keep strict tabs on your spending, maintain accountability, and spot overspending so that you can make necessary adjustments.

3. Don't go Overboard

Refrain from giving in to peer pressure to keep up with extravagant celebrations. Since each individual's financial situation is different, sticking to your budget is essential.

Be mindful of your spending, plan what you need and prioritise essentials over material possessions. Various financial institutions offer consumer durable loans, personal loans, instant loans, payday loans, etc. When you're eyeing something that's already at its best price, these loans make unaffordable items look affordable with monthly EMIs.

[Read: Festive Loans And Offers: Do They Really Help You Save?]

However, it is not recommended to do your festive shopping by going overboard with the help of a loan; it can put you into a debt overhang and impact your financial well-being. As a result, it is suggested to enjoy the festive season within your spending limits and carefully note all the expenses you anticipate incurring over the festive season.

4. Avoid Using Credit Cards

Using credit cards over the festive season is convenient since some credit cards are made especially for these occasions and provide alluring features like zero-interest EMI options or higher cashback rates. On the other hand, because of the high interest rates and regular use of credit cards, it is also quite easy to get into debt traps.

When making your festive purchases, consider using cash or debit cards rather than credit cards. In this manner, you may avoid accruing credit card debt and only spend money that you actually have. Although it is suggested to avoid frequent use of credit cards, in case you use them, ensure to pay off the balance in full to avoid piling the outstanding amount.

[Read: 10 Tips to Use Your Credit Card Wisely]

Before swiping your credit card, make sure you have a clear understanding of your credit limit. Overshooting or going above your credit limit might have a detrimental effect on your financial stability and result in large penalty charges.

5. Utilise Your Diwali Bonus and Cash Gifts Wisely

Many of you might receive monetary gifts from family members and an employer's Diwali bonus, which is often spent on fulfilling various short-term materialistic desires. However, one must practice delayed gratification to maintain financial stability and avoid debt burden.

Diwali bonus may seem like a gift, and you will be tempted to splurge the amount during this festive season. However, you must seize this opportunity to spend the amount in various ways, such as:

• Invest in mutual funds via SIPs or any worthy, suitable investment avenues;

• Boost up your emergency fund;

• Reduce your debt burden by prepaying your high interest loans, credit card outstanding, etc.;

• Buy an insurance cover for yourself and your loved ones;

• You may also consider investing in yourself by opting for an online course that enhances your financial knowledge.

This will serve your interest in wealth creation and improve your financial situation over the long run. It will give you a push to achieve your envisioned financial goals. No matter the amount of your Diwali bonus and cash gifts is huge or small, with effective financial planning, you can make the most out of it.

[Read: The Importance of Financial Planning: How to Get Started]

To Summarise...

Smart money management is the secret to reconciling your festive season spending within your financial capabilities. Festive shopping can be a rewarding experience when approached with careful planning and spending.

Additionally, keeping a close eye on your expenses and staying within your budget will make festivities truly joyous. Make your festive budget now and spend sensibly this holiday season to avoid worrying about not having enough money saved for emergencies and loan repayments in the coming year.

I hope these money management tips assist you in making wise financial decisions during the festive season. Spend sensibly and save prudently!

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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
 

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This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.