Have you planned for festival spends?

Whether it is using an RD or piggy savings, each family has its own way. Here is what some people shared with us

The spirit of festivity is already in the air, though there are a few more weeks to go for the the festival season to begin. No matter what the state of the economy is, people go on a spending spree at this time.

With an attitude of “after all, this is for a religious purpose and will bring good luck”, some even go overboard and don’t care about the quantum of this one-time splurging every year.

So how do people plan and manage this relatively high expenditure celebrating festivals close to their heart? We spoke to avid and not-so-avid shoppers for their take.

Plan the spending

Apparel accounts for a large chunk of the spending pie for most people. This is followed by electronic items, an LED television, for instance.

Planning the purchase much ahead of the festival depending on the financial situation makes a lot of difference. Depending on the cash flow situation, some purchases can be made much earlier while some can be done just a few days before the festival.

Bonus, RD, to the rescue

It is a good idea to invest with the intention to build a corpus to meet festival expenses. Sumana Lahiri, a home-maker from Delhi, spends₹30,000 to ₹40,000 on purchases during the festivals. She says, “I do a recurring deposit in such a way that it matures a month before the festival season, say, in August or September, and I use it for the purchases.”

Indian companies, generally, award a bonus to their employees during Diwali. Many rely on this one-time, but reasonable income to splurge during festivals. Indeed, many wait for the bonus to even begin their festival spends.

Rastu Singh, a Digital Marketing Specialist based in Kolkata, says, “I split my spend into two. In the festival month, once the salary is credited in the first week, I make purchases for some of my family members. Then, once the bonus comes in the middle of the month, I finish the rest of the purchases.” Apart from this, Rastu also makes use of a recurring deposit every year during the festival season.

Back to childhood

If you think a piggy bank is used to only teach children the habit of saving, you are wrong. It can be used as a saving tool for festival spends as well.

Vidhya, a home-maker in Chennai, has a piggy bank at home and saves a fixed amount of money in it every month. She says, “we open the piggy bank once a year during festivals and make purchases based on the total money saved in that year.”

A piggy bank does not earn any interest unlike a recurring deposit, but Vidhya makes up for that smartly.

“I know a piggy bank will not yield me any interest. I compensate by making additional savings in the piggy bank, on special occasions like birthdays in the family, wedding anniversaries, etc. Cashflow also comes in the form of gifts from parents when they visit us, the small amount obtained by selling the scraps — all of this goes into the piggy bank and that is the interest I earn from it.”

While people find different avenues to save for festivals, some, like Vickash Mehrotra, don’t make saving a festival-specific activity. “I do not save or make any special investment for the sake of spending specifically during the festival season,” says Vickash, Founder, Thinkking.in, a web/mobile application development company.

Online vs offline

The emergence of e-commerce portals in recent years has also influenced people’s spending to a great extent. The special offers, huge discounts, cash backs, etc, are spurring people to shift to online purchasing.

Over the years, Vickash and Rastu have shifted to purchasing everything from the e-commerce portals.

Though Sumana also purchases online, she prefers to buy offline when it comes to apparel. “I feel that the quality of apparels purchased online is not good and so I prefer to buy it offline from the stores, during festivals, for the entire family.”

But Rastu feels that there are option like “Try and Buy” where one can try the apparel at the time of delivery and decide accordingly.

Purchasing through e-commerce portals saves a lot of time, believes Vickash. “I do not prefer hopping between shops and so online purchase suits me well. I save a lot of quality time which I prefer to spend with the family.”

One disadvantage here is that you may not get good offers for the products you desire to buy. Also, purchasing through e-commerce portals increases the risk of additional and unplanned spending. “Since many other products are displayed along with the one you want to buy, you may end up buying more products than you originally intended,” cautions Vickash.

Do’s and don’ts

Festival spending is a one-time but recurring cost that an individual incurs every year. Experts say that proper planning well ahead of the festive season is a must.

Tarun Birani, Founder and CEO, TBNG Capital Advisors, advises thus, “define the spending with a minimum and maximum limit and arrive at an approximate amount of spending for that particular spending season beforehand.”

This planning exercise is essential as it gives you control over spending. Keeping track of the past festival spends will also help in the planning stage.

Experts are strongly against the idea of taking personal long during festivals. P V Subramanyam, CEO, www.subramoney.com, says, “it has become fashionable to take loans during the festival season. But you should never borrow.” He feels that ideally one should invest in RDs.

“One significant way to avoid taking a loan is by restricting the spending to the money in the recurring deposit for that year,” adds Subramanyam.

Experts also feel that taking loans is highly risky, especially in the current scenario of increasing job losses. They stress that festival purchases, especially the electronic goods, do not have a resale value, which is very true.

So if you lose your job, you are at the risk of not repaying the loan, caution experts.

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