Mumbai: Diwali, in today’s times not only brings to mind bursting crackers, home made goodies, diyas and welcoming Godess Lakshmi the Hindu deity of prosperity, but also learning to exercising restraint, not giving in to temptation, and keeping and maintaining that prosperity within the folds of your wallet.
If you are one of those sensible ones who have an exposure to the equity markets, now is not the time to cash out and spend the loot.
This is the time to exercise restrain on your spending. It’s very easy to get carried away in the general euphoria of the season. Rather than making your new found wealth a classic case of easy money; 'easy come easy go', one could actually look at this current run as a wealth accumulation strategy rather than splurge on stuff that will be forgotten.
So here are a few tips, which might be useful before you embark on your festive season shopping:
Keep a financial plan and stick to it
It’s easy to go astray with your income when you don't know what and how you are spending. A quick test to find out how seriously you need a financial plan:
How much did you spend last month on groceries, clothes, eating out, traveling (and do not refer to credit card statement for this) If you can’t give a figure close to the nearest '000's, its quite likely your cash flows are running awry and you aren’t saving as much as you ought to be. Get your budgeting and planning done as soon as possible.
It's advisable to build the plan at the beginning of the year itself. This way the entire years expenses, savings and investments are adequately planned and you don’t tend to overspend at the various occasions in the year.
Understand your spending habits
Are you an impulse shopper, a shopaholic who de-stresses through buying in the new age retailism or are you the sensible buyer, who always knows what s/he wants and gets out of the store within 15 minutes?
Think about the last few times you went out shopping and attempt a self-analysis on what your spending habits are.
In other words what really went wrong the last time you went shopping? It’s quite likely; that the rice boiler you bought in last season’s 'festive bonanza sale' is still in its packing box, lying, unused, in that kitchen cupboard which you only open during your annual Diwali cleaning. Or the car polish and shampoo from the local 99 Shop is 'somewhere' in the boot of your car.
If you are a frequent credit card user, you could get an idea of your pattern of spending and for what occasion it happened.
PAGE_BREAK
Some quick sure-fire ways to curb yourself from the impulse buying are stop (and we really mean stop) and ask yourself:
- What has attracted me more to the purchase; the bargain or the item in the bargain?
- Do I really need the item? How am I going to use to use it?
- Can I do without it? Have I been managing well without it?
- Would I rather see cash (saved from not buying that item) or the item?
Never go shopping without a list:
Diwali is the time for extravaganzas, bonanza, and dream offers. It’s easy to end up buying something you will never need and use.
Tide this problem by creating a shopping list before venturing out to your favorite supermarket for your Diwali household shopping.
Equip yourself with a list of items you plan to buy and need. You could also make envelopes for your budgeted items carrying just enough cash for the shopping list. If you see 'one on one free' or 'upto 50 per cent off’ - remember that there are no free lunches. Check if there is a catch here, do you actually need either of the articles?
Similarly, make a list of the people you would like to gift to. It’s advisable to go over the list over time in the coming couple of days, to make sure that it’s the final one. Pick something that’s usable, and within your budget. Scout around for the best deals.
Your credit card, your best friend or your worse enemy:
Plastic money with its ‘easy-to-make’ purchases makes exercising personal discipline and restraint a herculean task. In the heat of getting a never before bargain in the ever popular mall, very ably supported by the credit card, one fails to stop and understand the importance of the purchase.
Always pay credit card dues on time. If you cannot pay your chargeable out standings at the end of the month it’s possible that you are living beyond your means. It’s easy to lose track of the piling purchases one is making while swiping the card. That is till the end of the month when the bill arrives at your doorstep.
As far as possible refrain from holding multiple credit cards. While venturing out with the shopping list, carry as much cash as your shopping list warrants or use debit cards and dump the credit cards at home.
And we aren’t telling you to give a miss to all those offers!
Of course, sometimes there are good consumer durable bargains during the festive season; ideally understand all the features of the product and any valid reason for why it is available in the bargain.
Also be a smart buyer and know prices at other retail outlets. While paying off on the credit card, be aware of all the cash back offers and no interest EMI (equated monthly installment) offers on your credit card. Weigh the options and choose the most economic offer for payments on credit.
Try to remember that your need for the latest gadget gets satiated with its purchase, but with every such purchase you are moving away from your long term goal of meaningful wealth creation. Do not make your next impulse purchase at the cost of not meeting your financial goals
Of course, sending greeting cards is a thoughtful thing to do, but sending e-card is not only faster but also save you the money as well as help unclog the Indian Postal Service. And at least you are assured that your Diwali greetings will reach way before Christmas.
To sum up, plan your spending to the hilt. As in the mighty ocean so in your personal financial budget, every drop, (read every Rs 100) counts. An office Diwali bonus could actually turn out to be a ‘bonus’ income towards your financial goals.
The idea is not to be the local Uncle Scrooge or take a miserly view to life. A good financial plan takes care of you reaching your future goals without unduly compromising on your current life style and your standard of living.
The author, Prerana Salaskar is a Certified Financial Planner.
Comments
0 comment