How many of us have had our budgets spiral out of control during the festive season? How many of us haven’t been able to avail of even lucrative deals simply because we don’t know if we can afford to splurge? Haven’t we cursed ourselves and our lack of financial planning then?
The festive season (October to December-end) is when people across the world shop maniacally. And we’re Indian. We shop harder than anyone else. But the mistake most of us make is that we ignore the “shop” part when we do our annual home budgets. We budget for groceries, vacations, we save for our children’s education or for weddings but we forget to budget for festival-time shopping. There’s a method to spending money during this period. Here’s how to maximise benefits and minimise waste.
Get ready to shop: F
ollow the rules
1. Be patient:
If you want to take advantage of the most profitable deals during the festive season, you have to be patient for the rest of the year. By shopping during this season as opposed to any other time of the year, you can save money. Try and postpone purchases till the period before Diwali, because that’s when the good deals happen. Almost all manufacturers and retailers come up with attractive discounts and great combo deals.
2. Avoid impulsive shopping:
It’s quite likely that the coffee machine you bought during last season’s ‘festive bonanza sale’ is still in its packing box, unused. That could be because you didn’t really need it but bought it only because of the tempting deal. To avoid this, first ascertain if you are an impulsive shopper or not. Check your credit card bills and ask yourself these questions: Did I really need those products? Wouldn’t I be happier saving money instead of spending it?
3. Do your research:
It is very important to get the best of Diwali deals. Read up on the deals in newspapers, magazines and the Internet to zero in on the genuinely good bargains. Then pick something that most suits your budget.
Yes, there are lots of deals in every category – clothes, electronics, jewellery etc. You are going to get confused. So you need to get your priorities right before you buy. If there’s a great offer on a particular product but you don’t need that product in the first place, don’t buy it. For example, if shopping for your house, decide which of these you need most urgently: a bed, or a fridge or a TV. Buy one of these things. Similarly, choose between buying clothing and accessories.
5. You can’t avoid a list:
Make a list before venturing out for your Diwali shopping. You could also make envelopes for your budgeted items, carrying just enough cash for the shopping list. If you see a ‘one-plus-one free’ or ‘up to 50 per cent off’ deal, remember that there are no free lunches. Check if there is a catch. And do you actually need any of the stuff on offer?
6. Gift wisely:
Make a list of the people you would like to give gifts to. Go over the list to make sure that it’s the final one. Pick gifts within your budget.
7. Think smart:
Try to remember that your need for the latest gadget or those sexy shoes may be satiated with the purchase, but with every such purchase you are moving away from your long-term goal of wealth creation. Do not make your next impulse purchase at the cost of meeting your financial goals.
Think before you shop: How to budget your money throughout the year
1. Twenty-five per cent of your total annual income should be kept aside for the shopping expenditure that comes up throughout the year. For example, if the total income of the house is Rs 1 lakh then 50 per cent (Rs 50,000) of it should be kept aside for daily and monthly expenditure (food, bills, electricity, etc), 25 per cent (Rs 25,000) should go into savings (fixed deposits, retirement and mutual funds) and the remaining 25 per cent (Rs 25,000) should be kept aside for shopping.
2. Segregate your income under various expenditure heads. Further divide the shopping expenditure into four segments:
a) Keep aside 25 per cent of the money to buy clothes and accessories and for women, cosmetics.
b) Keep 30 per cent aside for home expenditure – changing the upholstery (every four years and usually during Diwali), cleaning (whitewashing) and changing the furniture, buying refrigerators, TVs, upgrading appliances.
c) Keep 10 to 15 per cent to buy jewellery (silver during Diwali or for weddings). This is also the time when the wedding season starts.
d) Keep 30 per cent aside for travel (holidays that most people plan during this time), eating out, gifting and socialising.Smart buying tips: Small tricks to save big bucks
1 This is the time when many credit card companies tie up with stores and offer 0 per cent interest if you shop from those stores.
2 Though shopping with credit cards is not to be encouraged, use the tie-ups to your benefit. But make sure you spend only the amount that you have allotted to a particular product or category, no more. And you should have that amount in the bank. Don’t shop on credit.
3You can now scatter the payment (from the money you have saved in the bank for this purpose) over two-three months (interest free). Plus you will get interest on that money from the bank. So you don’t overspend and you also manage to get interest this way.
4 Another plus point of using credit cards during this time is that you may end up buying in a hurry (because of all the attractive deals). What you buy may turn out to be faulty. Even if you have lost the cash memo but have your credit card receipt, you can go to the store and claim an exchange. And if you end up in consumer court, a credit card receipt will help.
5 Buy in bulk during festive season, for example: buy three sets of sheets and get one set free.
6 Also, avail of membership discounts. While shopping through the year, collect membership cards from the stores you visit most often. They generally offer five to ten per cent discounts. If you add that up, you will save a sizeable amount.
Courtesy: Jai Kumar Tejwani, chartered accountant and partner JKT & Co, and financial consultant Radhika Mehtani
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From HT Brunch, October 9
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