Festive spending: How to plan purchases and keep your finances on track

The festive season often brings higher spending on shopping, gifts and celebrations. Setting a budget, using credit carefully and planning purchases can help households manage these expenses without disrupting savings and other financial goals. Here are seven ways to manage festive spending, drawing on suggestions from financial and tax experts.

Set a spending limit Decide how much you can spend on gifts, clothes, food and celebrations before shopping begins. CA Ruchika Bhagat, MD of Neeraj Bhagat & Co., an Indian chartered accountancy and CPA firm, suggests setting an overall budget and per-person limits. Families can also consider arrangements such as Secret Santa to control costs.

Avoid impulse purchases Festive sales and limited-period offers can encourage unplanned buying. Gaurav Udani, founder of Thincredblu Securities, an Indian stock brokerage and financial services firm, advises consumers to decide their budgets before engaging with sale notifications. Compare prices and assess whether a purchase is necessary before placing an order.

Use credit carefully Check interest charges, fees and repayment terms before opting for credit cards or EMIs. Even no-cost EMI offers may have conditions or costs that need to be understood. Avoid purchases that could make future monthly repayments difficult.

Protect savings and investments Festive spending should not come at the expense of emergency funds or existing financial commitments. Udani suggests setting aside savings and systematic investment plan (SIP) contributions on salary day and spending from the remaining amount. Choose gifts based on need and value Bhagat suggests considering handmade gifts, locally made products and experiences such as a home-cooked meal.

These can be alternatives to expensive, store-bought presents. Reusable wrapping and practical gifts can also help reduce waste and unnecessary expenditure. Consider financial gifts Swati Jain, CEO – Wealth at Arihant Capital Markets, an Indian financial services company, suggests considering mutual fund SIPs as an alternative to conventional gifts.

Gold mutual funds and gold exchange-traded funds (ETFs) are other options for those looking to gift exposure to gold prices without buying physical jewellery. However, mutual fund returns are market-linked and not guaranteed. Before gifting an investment, consider the recipient’s financial goals, risk appetite, costs and account requirements.

Plan ahead and review expenses Shopping early gives consumers time to compare prices and avoid last-minute purchases. Bhagat recommends using discounts carefully rather than buying items simply because they are on sale. After the festivities, compare actual expenses with the budget to identify areas where spending can be controlled next time.

The aim is to enjoy the celebrations while keeping expenses aligned with household income, savings and financial priorities. NOTE TO READERS Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.

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Source: CNBC TV18