Diwali looming, this is how you must celebrate; 6 steps to personal bliss

Festive season puts everyone in a happy mood, making them more willing to indulge and splurge. It would not be an exaggeration to call the festive season in India a ‘Great Shopping Festival’. Brands capitalise on this festive spirit to offer tempting deals and discounts. No doubt, festive season turns out to be the most expensive time of the year for many, derailing them from the path of prudence and wise financial choices. Below are a few simple measures that you can take to enjoy the festivities this year without straining yourself financially:

1. Stick to the budget
As the tendency to go overboard with spending is high during the festive season, it would be advisable to determine a budget to stay in check. Draw up a list of expenses that are absolutely necessary and be as precise as possible. For instance, if you are setting a budget aside for gifts, set a budget for each person on your list. Next, decide the amount to spend based on your monthly income and expenses. If you realise that all your expenses are not fitting in your budget, prioritise. Avoid spending on items which you can buy post the festive season as well. Try resisting the urge to use credit cards for indulgence, as high-interest on such transactions create a debt trap 

2. Shop wisely
A shopping list is a great way to avoid impulse purchases. Once the list is ready, scout for deals and offers. Do not fall prey to marketing gimmicks which entails first inflating the price and then offering a ‘festive’ discount on the same.  Online shopping saves both time and money by allowing you to compare product features and price. Opt for cashback deals wherever possible. Redeem the have accumulated loyalty points on your membership cards.    

3. Build a ‘Festive Fund’
While waiting for the festive season to begin, how about setting aside a certain sum of money per month towards a special ‘Festive Fund’? Creating such a fund will ensure that you have enough resources to foot your festive season expenses without unnecessary stress. Add a 20% mark-up to the expenses you incurred last year and divide this amount by 12 to arrive at the monthly figure that you must contribute towards this fund. You can also explore short-term debt funds as an investment option. By sticking to this fund you can keep your expenses in check.

4. Plan your big-ticket transactions
If you have set your mind on booking that house or buying your dream car during the festive season, make sure to work towards these goals in a systematic manner. Just the way you compare discounts, deals and freebies before making a purchase, do a thorough market research of what is on offer before signing any deal. Read the fine print and seek advice from experts. Similarly, while applying for a loan, gain as much clarity as you can on your requirement and application process. 

5. All that glitters is not gold
Every year, there  is a surge in gold buying because many believe that the yellow metal is a hedge against future uncertainties. But gold offers no regular income other than value appreciation. Buying jewellery is advisable for consumption, but not investment. If you are looking at it from an investment perspective then a smart alternative would be to buy gold Exchange Traded Funds which are traded on the exchange and offer returns as per the price of physical gold. It will also save you the cost of keeping jewellery in safe custody.

6. Do save
If you get any bonus during the festive season, ensure that you save and invest a chunk of it before spending. Be mindful of your finances to ensure that you do not jeopardise other financial goals due to overindulgence in the festive season.

By: Arun Thukral 
(The writer is MD & CEO, Axis Securities)

Source: DNA Money