Overspending for Diwali shopping? Know how to manage your finances this festive season

After two years of muted celebrations due to Covid-19 restrictions, you might be tempted to shop more this festive season to take advantage of the deals, discounts, cashbacks, etc. being offered by retailers, online platforms and financial institutions. The availability of easy credit through digital loans, EMI options, BNPL, etc. would make you even overspend without much difficulty.

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However, you should not forget that taking out overspending credit would entail payment obligations from your future earnings and any default would entail high interest rates.

Anil Pinapala, CEO and Founder of Vivifi India Finance describes the personal finance rules to keep in mind during this festive season:

“With big discounts on multiple products and services this holiday season, you will most likely be inclined to engage in impulse purchases that will drive up your spending. These costs could exceed your income and put a financial strain on you. Therefore, sound financial planning becomes the need of the hour to offset all the extra expenses and add to the joy of your celebrations,” said Pinapala.

Here are a few things to remember as you head out this festive season:

Save in advance for festive celebrations

If you start tracking your expenses a few months in advance and set aside an amount of your income each month, you should be able to effectively cover the festive expenses. This prior planning gives you the freedom to make large purchases or plan trips without the spending interfering with your long-term financial goals. If you haven’t saved before the festival, you can always take out a personal loan to fund your purchases.

Set a budget and avoid deviating from it

Set a budget for purchases based on your income and bank balance. Listing planned purchases can help you determine costs. Remember that financial discipline is vital and following this practice will ensure that you are not financially drained.

Take advantage of the offers and discounts for your purchases

Festive occasions are one of the best opportunities to cheaply buy what you have been wanting for a long time. There are also instances where lending platforms like banks and fintechs partner with online merchants to get additional discounts including personal loan discounts and more. Take advantage of these discounts for your purchases.

Board Advisor and Finance Expert Anand Punmiya spoke on the importance of remembering personal finance rules when doing Diwali shopping: “Personal finances are an important aspect of our lives and how we plan for them affects all others related to it factors out. A small leak can crash a huge ship, and even seemingly “small” expenses can drain your budget. Especially when those “small” expenses add up to a significant amount of money that you haven’t budgeted for.”

“Timely repayment is key to having a healthy credit score, and this in turn is critical to your future borrowing needs as well as keeping interest rates low,” he added.

“One should avoid late or missed payments as this creates an additional financial burden as the bank or lending institution then charges late fees, penalty interest, etc., which in turn increases the payment burden. To avoid such problems, borrowers may consider prepaying loans in part or in full if they have access to additional cash, but before opting to do so, it is important to ensure that there are no prepayment penalties or that one has a waiver/a Lower penalties can be negotiated for prepayment,” Punmiya said.


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