Planning your Festive Spends ...

We are in the midst of the festive season–a vibrant and exciting period filled with fun, feasts, friends, and family. However, for most people, the story is the same come January–the weight is up a few kilos, sugar levels are up a few points, and the bank balance is down significantly! While I can't comment on the wellness aspects of the festive season, one can certainly ensure that one's finances do not suffer a hangover at the end of the party! Here are four steps to ensure that you are well prepared and geared up, if not for this year, then at least for the festive season in 2024 and beyond.

1.???? Make a Budget

You have probably been through enough festivals and know the drill. The markets are bustling, the online sales are enormous, there is retail energy all around, and it is easy to get swept in the festive fever and make impulse purchases. Setting a budget beforehand is the best way to protect yourself from unnecessary overspending. List out all the expenses you expect to incur during festivals next year. Go into as much detail as possible and prioritize the events and experiences that are significant to you. Differentiate between Needs–obligatory expenses that you have to incur versus Wants–discretionary spending that you could do without. Add up all these expenses and calculate what corpus you need next year. And then start saving towards it.?

2.???? Create a Festive Fund

Consider making a separate festive fund and consistently saving a little money into it each month. You can choose the appropriate instrument to invest in, depending on your risk appetite. A short-term recurring deposit or liquid fund would be suitable if you are conservative and want to keep things simple. If you are okay with some risk, you could set up a SIP into a balanced fund. And if you can accept some more volatility, you could invest in an equity fund. Irrespective of what you choose to do, a systematic earmarking of some amount, month after month, will ensure that you have a reasonable corpus for these festive expenses when you need them.?

3.???? Spend Smartly

You now have a budget and are saving towards it, which is terrific; you also have time to strategize your shopping. Marketing managers plan their year around the festive periods, and one is typically bombarded with deals, discounts, attractive advertising, new product launches, pushy salespeople, peer pressure and the like. But some of the best offers are actually found in the off-season. So, for example, one could find substantial discounts on items like air conditioners post-summer and heaters post-winter. Or take travel–if you will surely visit family during specific festivals, you can lock in low prices by booking travel or hotels well in advance. Wherever feasible, make the expensive purchases whenever you find the best deals, even if it is well in advance, and then use them when needed.?

4.???? Avoid Loans

Finally, as far as possible, don’t take loans to fund your festive expenses; if you do not have enough cash saved, ask yourself if you really need it. Personal debt will disrupt your financial plan to an extent like no other. The interest rates, fees, and additional charges are exorbitant, and before you know it, you will be stuck in a debt trap, struggling year on year to take care of your existing loans while piling on new ones. Restraining yourself will be difficult–banks, retailers, and lenders will throw every trick in the marketing book to get you to take a loan to fund your purchases! So, have the self-control and wisdom to make the right choices.?

Festivals are about love, laughter and cherished bonding with friends and family, and you should certainly not miss out on these experiences because of financial constraints. With some effective planning and doing some basic things right, it is possible to make the most of these joyous times without causing a massive dent in your finances.

Here's wishing you all a happy festive season!

Rishi Piparaiya?has held senior leadership positions in wealth management, strategy, sales and marketing with leading financial services organizations, including Citi, Aviva and Banco Santander. He left his corporate job at the helm of his career to pursue his passions. He is now a?bestselling author,?world traveller?and?angel investor. His latest book,?Three Pigs to Financial Freedom, demystifies financial planning and offers an incredibly easy system to manage your money for a comfortable, worry-free life.