Beware of Common Financial Pitfalls: 10 Money Mistakes to Avoid During Festive Season Sales
Every festive season, Indian households prepare for significant spending during celebrations like Dussehra, Dhanteras, and Diwali. These occasions often lead to the year’s largest purchases, driven by a sense of optimism. However, the ease of attractive offers and easy EMIs can lead to overspending. Key financial decisions occur at three critical moments: before shopping, at checkout, and when the bill arrives.
Before the Sales Begin
Festive sales are designed to create a sense of urgency, often leading consumers to buy more than they initially planned. Setting a spending limit and making a list of necessary items can help manage expenses. A budget allows consumers to enjoy the festivities without being swayed by sales tactics.
Additionally, festive bonuses should be approached with caution. While they may seem like extra money, they are part of earned income. Allocating a portion for celebrations while directing the rest towards paying off debts or saving can enhance financial stability.
At the Checkout
The payment method chosen during shopping can significantly impact overall costs. No-cost EMIs may spread payments over several months, but they still represent a loan. Buyers who pay upfront often benefit from discounts that EMI users miss. For instance, a television priced at Rs 19,500 may cost Rs 22,000 on a no-cost EMI, leading to additional expenses.
As multiple EMIs accumulate, they can strain monthly budgets. For example, a Rs 15,000 purchase on a three-month plan combined with a Rs 45,000 television on a six-month EMI can quickly add up. Consumers should track existing repayments to avoid overextending their finances.
Gold purchases during Dhanteras and Diwali also require careful consideration. Buyers should only purchase from reputable jewellers, verify hallmarks, and request proper bills. Additionally, festive deals can attract scams, so shoppers should be cautious about clicking on unverified links or sharing personal information.
When the Bill Arrives
The real financial challenge emerges when credit card bills arrive weeks later. Paying only the minimum due keeps accounts in good standing but incurs interest on the remaining balance. For instance, if Rs 2,500 is paid on a Rs 50,000 bill, the remaining Rs 47,500 will accrue interest, leading to significant costs over time.
High credit usage can complicate repayments. Spending a large portion of a credit limit can negatively impact credit scores and increase future borrowing costs. Payment dates also require attention, as missed payments can result in late fees and damage credit history. Setting up automatic payments and reminders can help prevent these issues.
Planning for future festive seasons can mitigate financial stress. Starting a festival fund immediately after the current season can help build savings for next year. Saving Rs 2,000 a month can accumulate to Rs 24,000 in a year, allowing for celebrations funded by savings rather than credit.
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