After two years of muted celebrations due to Covid-19 restrictions, you might be tempted to shop more this festive season to avail the deals, discounts, cashbacks etc offered by retailers, online platforms and financial institutions. Availability of easy credits through digital loans, EMI options, BNPL etc would make you even overspend without much difficulty.
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However, you shouldn’t forget that availing credits for overspendings would create payment obligations from your future earnings, and any default in repayment would attract huge interests.
“With big discounts on several products and services this festive season, you will most likely tend to indulge in impulse shopping which will shoot up your expenses. These costs could exceed your income and may burden you financially. Therefore, sound financial planning becomes the need of the hour to balance all the extra spending and amplify the joy of your celebrations,” said Pinapala.
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Here are a few things to remember while spending this festive season:
Save up for festive celebrations in advance
If you start a few months in advance by tracking your expenses and setting aside a sum of your income every month, you should be able to tide over the festive expenses effectively. This prior planning will give you the liberty to go ahead and make big purchases or plan travel without the expenditure interfering with your long-term financial goals. If you haven’t saved up prior to the festival, you can always avail yourself of a personal loan to fund your purchases.
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Set a budget and avoid budging away from it
Based on your income and bank balance, set a budget aside for shopping. Listing down the planned purchases can help you determine the cost. Remember, financial discipline is vital and adhering to this practice will ensure that you are not burdened financially.
Utilise the offers and discounts to make your purchases
Festive occasions are one of the best times to shop for the things that you have wanted for a while cost-effectively. There are also such occasions where credit platforms like banks and fintechs collaborate with online retailers making it possible to get additional discounts, including discounts on personal loans and more. Utilise these discounts to make your purchases.
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Talking on the importance of remembering the personal finance rules during Diwali shopping, Board Adviser & Financial Expert Anand Punmiya said, “Personal finance is an important aspect of our lives and how we plan it impacts all other factors related to it. A small leak can bring down an enormous ship, so too can supposedly “little” expenses eventually sink your budget. Especially, when those “little” expenses add up to a significant amount of money you didn’t budget for.”
“Timely repayment is the key to having a healthy credit score, and this again is crucial to any future loan need/s you may have, as well as for keeping interest rates low,” he added.
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“One should avoid delayed payments or missed payments as they lead to additional financial burden because the bank or the lending institution will then charge late fee, penal interest, etc which again will increase payment burdens. To avoid such hassle, borrowers can consider prepaying loans in part or full when they have access to extra cash, but before one opts for this, it is important to make sure that there are no prepayment penalties or one can negotiate for waiver / lowered penalties for prepayment,” Punmiya further said.
