Festival season is here, bringing with it a wave of celebrations, traditions, and gatherings. While the festive spirit is spreading, the financial aspect can be quite overwhelming. As you prepare for the rituals, parties, and outings, it's crucial to strike a balance between enjoying the festivities and maintaining your financial well-being. To help you navigate this, CNBC-TV18 spoke to experts who shed light on how much of your salary you should allocate for the festive season.
Adhil Shetty, CEO of BankBazaar.com, emphasises the
importance of aligning your spending with your financial situation. He advises against exceeding 30% of your monthly income on discretionary expenses if you typically follow the 50-30-20 budgeting rule. "Going beyond this limit can hinder your ability to meet savings goals and cover essential expenses," Shetty told CNBC-TV18.com.
The 50-30-20 rule breaks your in-hand income into three parts. 50% of the income goes to needs, 30% to wants and 20% to savings and investing.
Chakrivardhan Kuppala, cofounder and executive director at Prime Wealth Finserv, suggests a structured approach to ensure a financially sound festive season.
Prior savings
Kuppala suggests allocating 1-3% of annual income for the festive season.
"By planning ahead and saving this amount, you can cover your celebrations without straining your finances," he told CNBC-TV18.com.
Limit to 1% spending
If you haven't explicitly saved for the festivities, Kuppala advises to keep spending within 1% of your annual income. This approach prevents overspending and financial stress.
Avoid debt
"Sensible spending and reliance on your savings rather than credit cards should be your focus," he said.
Tips to avoid overspending during the festive season
Avoid unplanned shopping
When you visit markets or malls, the incredible discounts can persuade you to buy items that appear fantastic but have little use or gifting value. So, you should always buy what you need and
avoid purchasing what you want.Buy products that have utility
Experts also advise consumers to buy goods that have great utility and durability. For example, the purchase of electronic items will hold significance since a lot of work now happens through their effective usage.
Frivolous expenses that would otherwise happen on items during these festive times can be avoided.
Resist peer pressure
A lot of people even spend on otherwise useless purchases as everybody around them is doing so. However, experts say that one shouldn't spend just because others are spending.
Take advantage of different payment modes
Another thing to keep in mind is taking advantage of the various digital payment modes that offer the most convenience and bang for consumers’ buck. You should always go for a stress-free and rewarding experience.
Make prudent choice when taking a credit
According to Mahesh Shukla, CEO & Founder, PayMe, determining whether a short-term loan is the right financial solution for one's specific situation requires careful consideration of financial circumstances, needs, and alternatives.
"Primarily, an individual needs to evaluate their current financial situation, considering income, expenses, savings and outstanding debts. Before applying for a short-term loan, borrowers should always explore other options such as emergency savings and negotiating with creditors. Most importantly, borrowers should have a clear understanding of the loan type and go through every detail of it, including payday loans, personal loans, and credit card cash advances. Also, borrowers should compare different lenders to select the best interest rate offering, fees and repayment terms and go through the terms and conditions assiduously," Shukla said.
