The festive season in India is a time for celebration, for both customers and retailers. One gets to dip into bumper festive offers, discounts, and sales, the other gets to see more digital and physical footprints of shoppers. During the auspicious occasion of Diwali, Dussehra, or Christmas, retailers attract customers with exclusive deals and catchy marketing campaigns.
Such a euphoria though can result in overindulgence and reckless spending. The trend of buy-now-pay-later (BPNL) schemes is on the rise. Shoppers have the option of small credit loans, Credit Cards on UPI, easy personal loans, and quick financing options. If unchecked, the habit of using such credit options can compromise your long-term financial health.
A recent report by the Local Circles, a research agency, projects that Indian Households plan to spend around 1.85 trillion on shopping in the festive season of 2024. While treating yourself with the festive shopping spree is not bad, adopting healthy spending habits can ensure that you do not fall into a debt trap.
Here are some key tips to balance the joy of festive spending with sound financial discipline:
1. Set A ‘Realistic’ Budget: A healthy spending habit begins with creating a realistic and well-defined budget. Many customers begin their festive purchases without a clear idea of how much they want to or ‘can’ spend based on their income. To prevent overspending, amid tempting discounts and offers available both online and offline, do not forget to start with a budget and stick to it.
How to do this? Well, you can start by segmenting your budget across categories such as home decor, apparel, gifts, and entertainment. You can set financial limits on all these categories and control overspending on any impulse purchases.
Why is this important? While it is easy to account for big-ticket items, smaller purchases like festive decor and last-minute gifts can add up leading to budget overruns.
2. Needs Over Wants: It is easy to get swayed by the festive sales on gadgets, clothes and accessories which you do not need immediately but look attractive because of the offers and discounts. A healthy spending habit is to differentiate between what you ‘need’ versus what you ‘want’. Mankind a list of your essential purchases before indulging in sales can prevent impulsive and unnecessary additions to your shopping bills.
3. Use Cash Or Debit Over Credit Wherever Possible: While it is good to take advantage of festive discounts and deals, using cash or debit cards for purchases can help you limit accumulating too much debt.
This is ever more important with the coming of Credit Card on UPI where taking credits is easier than ever. Setting up a UPI transaction limit will help you limit purchases.
While using credit cards, make sure you take into account any high-interest debt pile-up.
4. Plan for EMIs and Debt Repayments: Should you choose to use credit cards or other financing options such as EMIs, small-ticket size loans, etc., ensure that you have a solid repayment plan ready. Though many retailers offer zero-interest which can be attractive, you must be wary of spending on things you don’t need. Before opting for these options, be aware of the terms, including the interest rate, tenure, and hidden charges like processing fees.
If you use BNPL services or Credit Line on UPI, remember that while these options make purchases easier in the short term, they can also disrupt your cash flow and long-term financial stability if not carefully managed.
5. Utilise Loyalty Programs And Cashback Offers: One of the best about online shopping is that you can hoard bog on cashback and discount offers, including those that come in the extension of loyalty programs. However, it’s important to ensure that you are not overspending just to accumulate points or take advantage of these offers.
Many retailers have tor-ups with banks and NBFCs to offer additional discounts for specific cardholders, it can be worth checking for such deals before making a purchase.
6. Resist Last-Minute Shopping: More often than not, the heavy burden on your pockets comes with those last-minute purchases. To top this off, many retailers launch ‘flash sales’ or ‘limited offer deals’ to create the ‘fear of missing out’ (FOMO) for consumers. Such emotional triggers often lead to purchasing things that you not have nought otherwise. As per the point, if you have a realistic budget such deals will look less attractive and will allow you to look for better deals without the pressure of making quick decisions.
7. Track Your Expenses: Last but not least, you should track your expenses to know where all that money is going. You may think you are staying within your budget but overall purchases can quickly add up. To be a step ahead of this, you can use expense tracking apps or go old school and maintain an account diary to monitor your transactions and stay within budget.
There’s no harm in a little indulgence during festive sales, but the key is to keep an eye on spending habits and stay within the budget.
