Christmas: Value for money festive season

Praveen Pillai (27), a medical transcriptionist, has lavish plans for the festive season a Christmas vacation with friends and gifts for family. This will cost him a fortune and hes toying between pulling out money from his mutual fund savings or swiping his credit card either option will dent his future finances.
Pillai represents todays generation who want to enjoy, and feel compelled sometimes to dip into their investments to finance that binge. The festive season is that time of the year when discount tags literally push you to buy products and services. In fact, 50%-60% of the spending is unplanned and impulsive. Lured by freebies and discounts, people end up buying more, which hampers their budgets and finances, says Anand K S, wealth manager of Nile Financial Planners, who adviced Pillai to avoid the options he was looking at.
Holidays, gifts, parties and marriages the list of occasions seems endless. With the year-end craze setting in, its important you plan your budget so that you dont go overboard with credit card payments and loans.
So whats the solution?
Plan your holiday spending without affecting mandatory expenses like taxes, childrens school fees and other annual commitments. Including festival spending into your financial plan is critical.
Anil Rego, CEO of wealth consulting firm Right Horizons, says one of his clients used to be an erratic spender. Based on our advice she now makes a budget every January and looks at major expenses she has to cover. She takes into account bonus payments and uses that to meet expenses, says Rego.
For the shortfall, we suggested a regular monthly recurring deposit. A lump sum investment of Rs 50,000 would be difficult to squeeze out. She now easily manages it with Rs 5,000 per month. She also manages her tax saving investments by doing a monthly systematic investment plan with both unit linked insurance plans and equity linked savings schemes. It saves on interest payments she used to make earlier to credit card companies.

Festive Fin Plan


• Include festival spending in your annual plan/budget

• Dont jump at offers. Identify and evaluate products you need and wait for discounts.

• Plan and book your holidays to avoid rush and price hikes

• Minimize credit card purchases and EMIs

• Use your annual bonus to shop and for vacation

• Choose a short-term personal loan over credit card

• Dont miss your tax saving and other investments because of the holiday expense

• Plan for the next year before its too late