Diwali: 5 tips to spend money wisely this festival; MintGenie tells you how

But is it not right to spend mindlessly during such times? Spending all your cash, using your savings, or maximizing your credit cards can lead you into a debt trap.

It is very obvious to spend extra money during festivals but it is equally important to plan and track your finances so as to avoid financial hardships in the future.

In this article we tell you some basic tips to shop but to avoid massive overspending or debt traps during this festival season:

Make a budgets

Making a budget is the first and foremost step to managing your expenses during the festive season. While it is pretty normal to spend more money than usual during the festive months, sticking to a budget helps avoid frivolous spending during such times. When you set a budget, you have control over your expenditures and can plan your purchases accordingly.

For instance, your budget for the festive spending is ₹25,000, make sure that you include every item, small or big, in that amount and not spend extra which may become a burden to you in your future.

Track your spending

It is very easy to make a budget but the following can become difficult when you have sales and discounts going on everywhere. Also, now with plastic money and online modes of payments, since you are not actually withdrawing and spending cash, it may become difficult to track your expenses. This could lead to you sending more than the stipulated amount.

So it is very important that you either write down all your expenses or use apps to keep a track of your expenses and inform you when you reach your limit. If you are using credit cards for these purchases, you can set a separate credit limit for this period, in order to avoid spending more than you can afford.

No borrowing

This is another very important point to avoid overspending. It is pertinent that you only spend the amount you have instead of borrowing from banks or financial apps, which are very easy these days.

When you borrow, you don’t only have to pay the amount you owe but also the interest on it which increases your total borrowed amount. So, it is important not to take loans, even small amounts or borrow from friends and family to shop during such times.

While it is advisable to avoid using credit cards to buy items during the festive season, in case you are using them, make sure you only use the amount you can pay back easily and never withdraw cash from your credit cards for such spending since it attracts a very high-interest rate.

Also, try to avoid schemes like buy now and pay later. It is better to make purchases with the money you already have than on credit which will burden your future.

Take advantage of festive discounts

While it is important to not go overboard shopping during the sales, these could help you purchase necessary items at a cheaper price. Products like electronics, household items, even clothing are available at steep discounts during sales.

So before making purchases check around for competitive offers but only buy items that are necessary instead of carelessly spending on unnecessary items just because they are available at a lower cost.

Prioritise your purchases

It is crucial to prioritise your purchases. First, purchase items of absolute necessity and then if your budget allows, shop for luxury items. It is better to completely avoid impulse shopping or buying items just because your friends and colleagues are. This way you get the joy of shopping as well as get the needed items at a discounted price.

So this shopping season, make a proper plan and stick to it to avoid future financial pain. Consistently check your budget, track your expenses and avoid impulse shopping under peer pressure. If possible, invest in schemes to ease your financial burden in the future.

This story was first published on MintGenie and can be accessed here.