The festive seasons bring a lot of impulse buying and spending. Most couples find themselves arguing about finances. Given that most households wait for festivities to begin for making new purchases. This uptick in festive spending also witnesses spike in credit card usage, given the large pool of benefits and discounts they offer. However, while attempting to maximize the benefits of credit cards, make sure you avoid making these mistakes, which can hurt your financial health this festive season:
Save towards your festive season expenses
Have you ever thought about putting money away each month, starting in January, saving towards the festive season? If you put aside $100 a month from January to November, you will have $1200 to spoil yourself and your family. In addition, if you put this money into a savings vehicle, you will add interest to the amount saved.
Stick to your budget
Prepare a realistic budget and stick to it. Do not let the December hype and frenzy derail you. A good idea is to keep your receipts and track your spending habits to monitor that you remain within your budget. If you realize that you have been a bit on the generous side of spending, then identify what your necessities are for the remainder of the month and only purchase items that you have listed as basic needs. Buy things in bulk OR buy gifts early and spend wisely.
Exhausting festive bonus
Many companies declare bonuses for their employees during festivities. However, some people think getting the festive bonus is like winning a lottery, and they end up spending it all on unplanned and discretionary expenses. In reality, a bonus is nothing but their hard-earned money, which they receive as an acknowledgement of their hard work.
As such, bonus money should be used wisely. You will be well advised to use it intelligently to meet important financial requirements first like prepaying a home loan, clearing snowballing credit card or personal loan dues and even for home renovation or to fund an up skilling course. In the absence of any urgent financial requirement, they should ideally invest a major portion of it to grow their wealth. The remaining can be used for festival-related expenses.
Making hasty investment decisions
Holiday seasons are believed to be highly auspicious for investing money. Mutual fund companies, stockbrokers, insurance companies, realty developers, etc. come up with attractive offers to entice investors. Some people look at the attractive offers and invest their money without giving it a second thought. Such unplanned investments, however, do not help in achieving their financial goals.
While investing during the festive period, match the features of the investment product with your financial goal’s requirement. Do check aspects like risk, return, liquidity, tax efficiency, cost of investment, and then make an informed investment decision.
Prioritize your expenses
Your bills need to be paid whether you celebrate the festive season in style or not. Avoid a situation where you have spent all your money on unnecessary items, prior to paying your essential bills such as your bond, school fees, debit orders, investments, and clothes. Put away the money you need as soon as you receive it; or better yet, pay the necessary bills as soon as you can. This way you will be able to identify how much ‘festive’ money you have with the comfort of knowing that your day-to-day bills have been paid.