If you have spent during the festive period more than what you had earlier planned for, you must not delay taking steps for a quick financial recovery.
Are you still in a big festive spending mood? It maybe time to come out of it and assess your spending during the recent festive period. If you have spent more than what you had earlier planned for, you must not delay taking steps for a quick financial recovery.
Here are a few tips that could help you regain control of your finances after festive overspending.
Assess the extra money spent
Your first step should be to assess what you’ve spent over and above your festive budget. It will help you to decide the plan of action. You should consider all spending, whether done in cash, online, or through debit or credit cards. If you have taken a loan for spending during the festive period, that needs to be segregated, as, in the future, you may have to use a portion of your income to repay the EMIs.
Get rid of credit card debt
Credit cards can help you get discounts and reward points when you use them during the festive period. However, you may easily indulge in overspending if you are not careful when you use a credit card for festive shopping. If you have used a credit card during the festive period, try to repay the full outstanding within the interest-free period to avoid interest charges. If you have spent more than your expected limit, you can check whether you can get the utilized amount converted into EMIs so that you can repay your dues easily without any default.
Tighten your budget
Exercising cost-cutting measures could help you to quickly come out of the festive overspending stress. But how long would you need to live with a tightened budget? Well, it depends on how much you have overspent. You may cut down unnecessary expenses and temporarily suspend low-priority spending while tightening your budget. The steps could be resisting a fresh shopping spree, devising ways to cut down your groceries budget by availing credit card-linked cashback or loyalty discounts, sticking to the shopping list based on actual requirements, reducing food order-ins, temporarily suspending entertainment-linked costs like monthly subscriptions for multiple OTT platforms, avoiding weekend outings, etc. based on feasibility.
Reconsider plans for your short-term expenses
You may have planned for meeting some expenses in the sort-term like buying a new bike or a car, going out on a vacation, buying a new mobile or a laptop, and so on. However, you may now want to reconsider these plans to meet more essential financial obligations that you can’t delay. Once you overcome festive spending, you can reinstate your plans to meet all types of short-term expenses.
Save first, spend later
The reason behind exercising various cost-cutting measures is to be able to save more from the same income pool so that you can quickly refill the shortfall caused by your festive overspending without disturbing your essential financial obligations like rent, home loan EMIs, groceries, utilities, etc. An extremely handy yet oft-forgotten trick is to save a sizeable portion the moment you get your salary and spend the remaining on essential commitments, and not save whatever is left after you’ve spent your money.
Plan better for your best festive spends in the future
Festive overspending can lower your capacity to achieve your short and mid-term financial goals. That’s why it is critical to ensure that you plan better for your festive spends in the future. You can do so by making a list of your big-ticket spends in advance, set a comfortable budget for each item on your list and have a plan to generate the required funds by allocating savings or investing in advance to avoid exerting excessive pressure on your finances and minimising the chances of having to borrow money during the festive period. You can also put in some research to dig out better deals by making your planned big-ticket purchases during online and offline shopping festivals and using your credit card for the purchases to bag additional discounts, instant cashback or accelerated reward points.
In conclusion, financial discipline and planning will go a long way to ensure you don’t struggle with your finances and are not required to implement harsh cost-cutting measures after the festive season.
(The writer is CEO, BankBazaar.com)