How to plan your festive spending

This is the most busiest part of the year in India with festive season approaching. Dusherra will be followed by Deepavali with Christmas hot on the heels. A very good season for festivities, but bad ones for savings and pocket book.

One often makes avoidable expenses that with just some planning and discipline can ensure that we do not have an after party (financial) hangover.

"There most certainly is a trend to splurge on expenses during this time of the year," says Ankur Choudhary, co-founder & CIO, Goalwise.com, adding that unnecessary spending during these months rises.

"The current generation no longer shies away from consumption," confirms Saurav Goyal, Head of Finance, Money View, adding that a lot of this spending is not only from earnings (read salary), but is also loan driven.

To be sure, it is the retailers who encourage this spending splurge. "E-commerce biggies (like Flipkart and Amazon for example) tempt consumers to make big-ticket purchases through various offerings like cash-back offers, discounts, high-speed delivery, quick installation, etc. This in turn leads to higher than planned spends by the customers," says Arvind Prabhakar, CEO, and co-founder of GyFTR (Vouchagram).

The news about mis-spending gets worse.

"Saving up for the festival season has traditionally been a practice in India. However, now this seems to be changing with greater discretionary spending habits," says Ankush Aggarwal, CEO & founder, Avail Finance. In the absence of savings, consumers are forced to take loans during the festive season to fulfill their spending needs.

"We have certainly noticed a sharp increase in the number of loans availed during the festivals like Ganesh Chaturthi and Diwali," says Aggarwal. During this period, there is an increasing in demand for micro loans ranging from Rs 20,000 to Rs 50,000.

Reports show that ad spends by retailers during the festive period make up to 40% of the annual marketing spending, giving you an idea of how much this season accounts for spending.

Also, the very nature of our traditions makes us susceptible to over-spending during this time of the year. The festive season is also associated to a lot of cultural references like buying of new clothes in Diwali, gold during Dhan Teras, vehicles during Dussehra or Ganesha Chaturthi, a lot more housewarming functions during Dussehra, etc.

And the government too here isn't helping in the matter. Given that there is a slowdown in the economy, the government has been trying to increase spending in the economy by introducing various measures like rate cuts, reducing risk weightage on personal loans, an impetus to the housing industry, consumption industry, etc.

However, experts share some financial discipline and yes planning that one can avoid starting with the New Year with a lighter bank balance than you have now.

"Even before the festivities kick off, draw up a budget," urges Choudhary. Allot a realistic (based on your income and expenses) amount for spending during the festive season.

Create your planned shopping list and then divide your budget into various categories – clothes, shoes, gifts, home decor etc. If the numbers are not adding up, you may want to make some sacrifices. "Before purchasing any item, ask yourself if the purchase will cause financial problems down the road," says Choudhary.

Refrain from spending on arbitrary stuff, even if they are available at discounted prices.

Saving for the happy season is another key.

One should also stay prepared for an increase in discretionary spending during the festivals by keeping a corpus ready for such occasions. "By saving small amounts on a weekly or monthly basis, one can actually build a festive spending fund for such fixed annual occasions," notes Aggarwal.

Even if you have to shop there are still tricks to reduce your financial spend.

Point redemption is one method to lower your final billing amount when you shop. "With multiple cards or online payment transactions, you might have accumulated points without even realising it," says Prabhakar. Keep an eye out for texts or emails that might look like spam but are point collection alerts. These previously racked up points can get you to gift vouchers of brands like Amazon, Croma, Bata, etc.

The festive season has a lot of discounts and offers on hand, but avail of such sales only after reading the fine print, say experts.

Also, please keep an eye on all the offers running on different online platforms. Online platforms which accept gift vouchers always give you a better deal as you can always pay via vouchers and if you purchase the voucher at a discount, there is all the more reason to rejoice. These offers can help you get more out of each purchase by doubling your savings.

"Another strategy could be to limit your expenses to the bonuses that many employees are paid (by their companies) during the festive season," is an idea that Goyal shares.

Also buying through EMI method or taking up personal loan would be a better method, rather than individuals buying through credit card.

Finally however it you – the consumer that is the key.

"Planning a budget is not enough; sticking to it is the key," says Choudhary. In case, you are planning to buy an expensive item like an iPhone, an option is goal-based investing to save for it.