The festive season is filled with fun, feasts, friends and family. For many people, the story is the same after Diwali: weight and sugar levels are up, and bank balance is down. I won’t comment on the wellness aspects of the festive season, but here are some ways to prevent a financial hangover after the party.
Set up a festive fund
If your Diwali expenses drained your savings, it’s time to set up a festival fund. Expenses don’t become a burden if they have been planned. A separate festival fund in which you put away a small amount every month will allow you to spend freely without borrowing or dipping into the savings for other critical goals.
You can choose an appropriate instrument depending on your risk appetite. A recurring deposit or a short-term debt fund are suitable if you are conservative. At the prevailing rate of 7.25%, a monthly deposit of Rs.10,000 will grow to roughly Rs.1.3 lakh in 12 months. If you can tolerate some risk, start an SIP in a conservative hybrid fund. The table here shows how much you need to put away every month to save Rs.1 lakh in 12 months at different rates of return and levels of risk. Though equity funds require the lowest amount, they may not be appropriate if you need to withdraw the money for next year’s festive spending.
Shop for bargains
Once you have set up a festive fund, you have time to strategise your shopping. During the festive season, one is bombarded with deals, discounts and new product launches. However, some of the best offers are available in the off-season, especially when it comes to clothing and gadgets. Ecommerce players also offer some great bargains from time to time. Keep your eyes peeled for such discounts and whenever you spot a great bargain, just grab it. This will also help relieve the pressure when you go shopping for gifts during the next festive season.
Avoid loans and dipping into savings
Setting up a festival fund will also help you avoid costly loans during the festive season. Personal debt can disrupt your financial plan in many ways. If you are not careful with repayments, your credit score can get tarnished.
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 getting basic things right, it is possible to make the most of these joyous times without causing a massive dent in your finances.
(THE WRITER IS AN AUTHOR AND FINANCIAL MENTOR)
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