5 money mistakes to avoid during this festive season
What's the story
The festive season in India is here, and it's easy to get caught up in the excitement and overspend. However, this can lead to a financial hangover once the celebrations are over. With households expected to spend record amounts this year, it's important to be aware of potential financial traps that could affect long-term stability. Here are five common money mistakes people make during the festive season and how you can avoid them.
Mistake #1
Ignoring post-festive expenses
After the festive season, people often forget about unavoidable expenses like school fees, annual insurance premiums, and credit card bills for holiday spending. This can lead to a stretched budget and depleted savings. To avoid this mistake, plan your post-festive expenses in advance and set aside money during the celebrations to cover these costs.
Mistake #2
Impulse buying due to e-commerce sales
The festive season has turned e-commerce sales into a national event, luring millions with deep discounts and digital convenience. However, this can lead to overspending as people buy things they don't need due to psychological pressure from limited-time offers. To avoid this mistake, be mindful of your spending habits and resist the urge to buy things on impulse just because they're on sale.
Mistake #3
Not reading the fine print of EMI schemes
No-cost and low-cost EMI schemes are available for everything from gadgets to home appliances. However, these schemes often come with hidden costs like processing fees and GST, which can increase the total cost of the purchase. To avoid this mistake, read the fine print of any EMI scheme before signing up and factor in all potential costs when budgeting for your purchase.
Mistake #4
Liquidating long-term investments for short-term gains
Cashing out long-term investments like equity mutual funds or fixed deposits to fund short-term celebrations is a common mistake. This destroys the compounding effect that builds wealth over time and could also incur tax penalties. To avoid this mistake, never liquidate your long-term assets for festive shopping and consider creating a separate festival fund through small monthly savings throughout the year.
Mistake #5
Prioritize experiences over things
Many people focus on expensive material purchases during the festive season instead of meaningful moments with loved ones. To avoid this mistake, prioritize experiences over things and remember that the joy of festivals comes from togetherness, not price tags. By avoiding these common money mistakes, you can enjoy a financially stress-free festive season while still celebrating wholeheartedly.