The months of October and November followed by December are considered not only as the time of festivities, but also a time for bringing about major changes in our lives and preparing ourselves for the coming year.
Anshuman Narain, VP, CashBean, PC Financial Services, says, “Financially speaking, this is also the time to make a course correction or evolve one’s economy to better shield for the future.”
Sometimes this requires making direct intervention and other times it simply needs one to be conscious of one’s cash flow.
Zafar Imam, CEO, FinShell, says “Maintaining solid financial habits allows one to create a better present and future. A vital component in maintaining good financial health is being aware of and mindful of the entry and outflow of funds. This not only clarifies expenditures but also accounts for any surplus that might be saved for the future.”
This is how it can be done:
- Curb Competitive Spending – This occurs especially during the holiday season which in some areas becomes a demonstration of wealth and an unhealthy rivalry. Narain says, “The idea is to make memorable days with your family and friends so plan for your holiday spending beforehand and keep it strictly within the budget.”
- Bonus Impulse – This is also the period when companies tend to be generous with their key employees in form of special bonuses and other benefits. It is easy at this time to get carried away in the feeling and start spending beyond one’s means, hence, leading to a larger debt trap. If you get a bonus of say Rs 50,000 resulting in which you end up getting yourself that new smartphone you wanted (unplanned spending) for Rs 1,30,000 then you are not up by Rs 50,000 but down by Rs 80,000.
- Keep track of your spending – Budgeting is a way to keep track of spending. According to Amit Chaturvedi, Co-Founder Paytail, budget isn’t to dictate exactly how much you’ll spend on each category, it’s to give you guidelines to follow so that you can achieve your other savings goals without overdrawing your account.
- Exhausting monthly savings – You will be surprised how many people come out of the holiday season having completely exhausted their earnings for the period. Narain adds, “Considering that the holiday season repeats each year that ensures that for a significant period of your earning life you will be doing zero savings and investment. That is a problem that will come to bite you much later but it will bite nonetheless.”
- Establish an emergency fund – Buying with easy EMI, Chaturvedi says “is a way of saving money, as it allows for spreading the money one spends over a period, allowing one to continue with the savings for future use.
- Front Running Inflation – Industry experts say, all should be aware that the next 2-3 years to be a high inflationary environment. “Your income today in a way should be prepared for inflation of 2 years from today taking the current rate of inflation,” adds Narain.
- Keep track of your investments – “Just because it’s the festive season, do not forget to invest as it is the key to a safe and secure future,” says Anil Pinapala, CEO- Founder, Vivifi India Finance, implying that one should continue investing, and not delay it. He further adds, “If an individual hasn’t already invested, he/she should not delay further and choose a plan that suits. Make sure to keep the EMI amount aside, do not use it up in the name of the festive season.”
Though financial behaviour does not change instantly but keeping these points in your consciousness and pushing back against impulse purchase will go a long way towards a solid financial future.