Overspending during the festive season is unavoidable. Both offline shopkeepers and online merchants offer heavy discounts and give price cuts on almost all items. Festive shopping often leads to overspending. Such purchases, which are often impulsive in nature, can potentially unsettle you financially for the short term and may prove hazardous to your financial planning as well. That is why, you must draw the line to curtail your expenses and prudent measures should be taken to have a stress-free shopping experience within your spending limits.
Here are some tips you may find useful in avoiding overspending this festive season.
1. Control Emotions-led Shopping
Human psychology plays a vital role at the time of shopping. Emotions-led purchases and fear of missing out on the latest trends may affect your finances. So, first and foremost, have a little bit of control over your impulsive approach to buy things immediately. It may be difficult, but it will help you get rid of your financial stress. Stay disciplined without disrupting the day-to-day expenses.
2. Spend As Per Your Budget
If you are buying multiple things, it is advisable to prepare a budget before you start spending money. Knowing your spending ability taking into consideration your current and future cash flows, savings and monthly expenses give you a clear picture of what is your budget and how much you can exceed it. Stick to your budget by adjusting all your upcoming festive purchases within it.
Also Read: Where to invest this Diwali to light up your finances
Adhil Shetty, CEO, Bankbazaar.com, explains, “It is quite normal to exceed your budget during festive shopping for Diwali. Ensure that after the festive season, your spendings won’t impact your ability to meet primary expenses such as rent or EMIs. Even if you have overspent especially on your credit card, waste no time in coming up with a repayment plan. See how you could save more in the coming months in order to recover from your unplanned splurge.”
3. Plan Your Purchases In Advance
Festivals come every year. Therefore, you have ample time to plan for your shopping in advance. Manage your cash flows during the entire year while allocating a certain sum on a regular basis for festive purchases to overcome the problem of overspending. For instance, if you require, say, Rs 1 lakh to spend, you can plan it accordingly by accumulating the sum through monthly allocations. A little less than Rs 10,000 monthly savings would be adequate. You can either start a short-term Recurring Deposit (RD) with Rs 10,000 monthly or put the same in a debt or a balanced fund. The interest or returns accrued during the tenure will be an extra bonus which can be utilised during festive times.
4. Priorities Your Needs
Prioritisation of what you need can help in managing your festive purchases. Things which are needed the most and can’t be avoided any more should top your shopping list. Non-essential purchases can wait. It’s worth reminding ourselves that every time we can’t have the best of both worlds. A little bit of adjustment does prove prudent.
5. No Cost Financing Options
At times, you run out of money, but some important purchases can’t wait. This can happen with anybody and is normal. In such a situation, you may try the no cost financial options like no cost EMIs on your credit cards or schemes like Buy Now Pay Later. Opting for such financial products may not shield you from overspending but it would effectively delay the payment for the current purchase. Thus, you can conveniently repay the amount in installments in the next couple of months. This will help you not get overburdened during the festive months and keep your financial stress at bay.
A disciplined financial behaviour is of paramount importance. One should know to differentiate between needs and wants. When things are planned well in advance, effective budgeting is done and most importantly when you know your financial condition by understanding cash flow situations in the short to mid-term, you become conscious of your spending habits. A regular cash flow analysis and continuous review of budgeting exercises tend to help control overspending.