While it is the season of joy, celebration, and togetherness, for many homeowners a festival period can also be a time of financial stress, especially when trying to balance the excitement of the season with their ongoing commitment to home loan EMIs.

Time and again, it is said that the foundation for attaining financial stability, especially during the festival season, lies in creating and adhering to a well-structured budget.

Jot down all your expected expenses associated with the holidays. Here, one needs to list down all possible costs, because even the small costs add up. It is important to factor in the home loan and other EMIs, too. Then, compare this total against your monthly income.

This exercise will provide a clear understanding of how much you can afford to allocate for festival expenses without compromising your other financial obligations. In case you see that your expenses are exceeding your income, you need to look at various ways you can cut down on expenses.

Prioritise EMI Payments

One of the most critical aspects of balancing festive spending with home loan EMI commitments is to prioritise your EMI payments above other expenses.

Missing EMI payments can have severe consequences, including a negative impact on your credit score and additional penalties. 

Hence, as mentioned earlier, if you see that you do not have enough money for your EMIs, you need to cut down on discretionary expenses.

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Avoid Impulsive Purchases

The festive season is a time for brands and companies to tempt customers with enticing sales and offers. To avoid being lured into it and overspending, create a shopping list with planned purchases and stick to it.

Impulse buying can lead to unplanned expenditures that disrupt your budget. A new phone can wait, but you cannot afford to miss out on EMI payments. 

Consider Festive Loans Wisely

While festive loans may seem attractive with their quick approvals and alluring offers, it’s essential to consider them carefully. Taking on additional loans should be avoided unless absolutely necessary, as it can increase your financial burden in the long term.

Instead, use your savings or bonuses to cover festive expenses. In case a loan is required, it is important to reconsider the purchase. Missing out on EMI payments will affect your credit score and may land you into a debt trap. 

Negotiate Discounts and Cashback Offers

When making festive purchases, always try to negotiate discounts or take advantage of cashback offers. Retailers often have special promotions during the festive season, and these savings can add up, reducing the overall cost of your holiday expenses. It helps to check prices at different online and offline retailers to get the best deal. 

Maintain an Emergency Fund

Financial emergencies can occur at any time. It’s wise to have an emergency fund in place to cover unexpected expenses during the festive season. This can prevent you from dipping into your budget set aside for your home loan EMI. 

An emergency fund should be equal to at least six months of your expenses and should be used only in case of an emergency. 

Communicate with Lenders

If you find yourself facing financial challenges that make it difficult to meet your home loan commitments, the best course of action is to communicate proactively with your lenders. 

Most financial institutions offer options for loan restructuring or EMI rescheduling, which can provide temporary relief without adversely affecting your credit score. 

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Use Festival Bonuses and Monetary Gifts

Many of us receive festival bonuses or monetary gifts during the festive season. Instead of splurging this extra income on non-essential expenses, consider making partial prepayments on your home loan. 

Reducing the principal amount can lead to long-term interest savings, and also reduce your EMIs, further improving your financial stability.

Consult Financial Advisors

Sometimes, managing finances during the festive season can be challenging. Seeking advice from financial advisors or counsellors can help you create a customised financial plan that ensures you meet your EMI obligations while still enjoying the festivities.

Set Up a Separate Festive Expense Fund

For those who want to plan ahead, creating a separate fund dedicated to festive expenses is a proactive approach. This fund can be built up gradually throughout the year, ensuring you have the necessary resources to cover your holiday spending without affecting your EMI commitments.

Balancing festive season spending with home loan EMI commitments is indeed a challenge, but with the right strategies in place, you can have a joyful festive season, yet not worry about your finances.

This article has been written by Atul Monga, CEO and Co-Founder, BASIC Home Loan. Views are personal