How to plan your finances for holiday season

Having an overall budget is a good way to stop expenses from compromising your other financial goals.

By Ankur Maheshwari CEO-Wealth, Equirus

With average Covid cases of around 10,000 – 12,000 in the last fortnight and with most people having completed their two-dose vaccination regime, most of us are eagerly looking forward to the holiday season. Given the easing of tourism restrictions both domestically and internationally, most of us are itching to travel again. In case travel plans are yet to fructify, holiday season and accompanying end of season sales is tempting enough to overhaul our wardrobe or buy new electronic gadgets (TV, mobile etc).

Given the Covid fatigue from last year, most of us are also looking forward to celebrating upcoming marriages, anniversaries, or birthdays with more gusto than usual. In sum, the upcoming holiday season entails increased spending / expenses. As the age-old proverb says “All work and No play make Jack a dull boy”, it is always prudent to take a break and rejuvenate, however we must be mindful of enjoying while adhering to our financial goals.

Key financial aspects while enjoying the upcoming holiday seasons:

1. Make a budget and importantly adhere to it

Making a financial budget is probably the important step to begin with. Please spend quality time in making your budget while accounting for all foreseen expenses and keeping aside a certain amount for unforeseen expenses. When creating a budget, please use the tools and resources you find most helpful. Please discuss with your family to derive a percentage of total income that you intend to utilise for travel or large ticket spends. Ensure to get family’s buy-in for the decision and enjoy the spend as a reward for yourself and your family. Having an overall budget is a good way to stop expenses from compromising your other financial goals.

2. Plan-in-advance but remain flexible

In-case of travel, please ensure you plan your trip in advance. Increasingly, travel websites offer a cancellation window as well. Advance planning will help you to avoid last minute surge pricing for airlines and hotels. With Covid and ongoing uncertainties, remaining flexible always helps. One never knows. With reference to shopping, it may help to activate price drop alerts or keep a lookout for cashback offers on white goods. Please always remember the wise word of Benjamin Franklin – “A penny saved is a penny earned”.

3. Always ensure to keep a buffer

No holidays or shopping experiences are complete without last minute additional expenditure or instinctive add-on buying. Hence please ensure to keep a buffer to accommodate any change of plans or any last-minute addition to the shopping list.

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4. Don’t let debt be the overhang to spoil your holiday season

At the end of the holiday season, a lot of us run the risk of accumulating personal loans or overdue credit card payments. Please ensure debt overhang doesn’t ruin your financial discipline.

5. Ensure strict adherence to investment plans

While enjoying the holiday season, please ensure you also stick to your Systematic investment plans (SIP’s) or Systematic Transfer Plans (STP’s). Stopping or missing even one SIP or STP is never recommended.

6. Don’t compromise your priorities

It is common for us to dip into our savings while going on family trips or for large ticket purchases. However, given all the uncertainties around us, please avoid dipping into your emergency funds to enjoy one extra day on holidays. It is extremely important to remain financially prudent and keep priorities intact while enjoying the holiday season.

Over the last several months, most of us have experienced mental fatigue owing to Covid and Covid related numerous uncertainties. For most of us, the upcoming holiday season is expected to provide a resemblance of normalcy to a certain degree in our lives. Just as we will be mindful of following Covid norms, we should also be mindful of following our financial plan while making the most of the holiday season.