Spend without worry this festive season by managing your finances

Ishaani Paul (name changed) is engrossed with crossing out things on a crumpled checklist as she sips her cup of coffee. Two suitcases are sprawled at her feet in her bedroom – a bunch of brand new clothes with their tags intact have been piled one on top of the other.

Singhal, a 35-year-old homemaker based in Mumbai is scheduled to fly to her parents’ place next month for Durga Puja celebrations. Every year, she buys gifts for her siblings, their spouses and their children and her parents for Durga Puja and this is a ritual that she has never faltered with, she quips.

India is known as the land of festivals – festival celebrations in India have been an indispensable part of the incredibly diverse social, cultural and religious tapestry. The close knit community structures and the strong social cohesion ensure that every festival in India is celebrated with pomp and show.

“People across the country look forward to this time of the year – there is Durga Puja, Karwa Chauth, Diwali, Chhath. The onset of autumn fills me with such beautiful memories of the Durga Puja celebrations I witnessed at home as a child and I have tried to give my children the same experiences with our festivals. In this age of technology, festivals have assumed greater importance and such days are worth looking forward to as they remind us of the importance of living our lives beyond the confinement of screens. However, they are also a major expense overhead and because of the cultural and sentimental element of festival celebrations, this issue is rarely talked about,” Ishaani says.

In India, observing festivals can be an expensive affair. Be it new clothes, gifts, cash, jewellery or paraphernalia for religious rituals or lavish food – obligations can snowball into major expenditure. Although Indians frequently shell out a sizable amount of money for these occasions and the likes, the awareness about the need for a financial plan for these expenses is lacking.

What is also frequently ignored is that managing such expenses judiciously can be harder for the women. Traditional gender conventions require women to play a more active role when it comes to maintaining the integrity of festival celebrations. Be it buying gifts for family members or hosting parties and gatherings or prepping for rituals – organizing all these during festivals demands greater involvement of women. Consequently, many women find themselves struggling with their finances during the festive season.

“It has been a few years since my husband and I have been maintaining a separate fund for festival expenses. Prior to that, there have been instances where I found myself having to compromise with my other financial goals because I would overspend during the festivals and the fact that I didn’t have my own source of income made matters worse. Based on other liabilities and financial variables, we decide on a budget beforehand so that we don’t end up overspending. Prior planning reduces the chances of getting carried away and making unnecessary purchases and ensures there is less strain on our finances and that the festive spirit is not marred by concerns of the possibility of financial distress later on,” Paul narrates.

For Madhushree Choudhary (name changed), an investment banker based in Hyderabad, the struggle with managing festival expenses is similar. “We live in an age where the value of anything and everything is based upon how ‘Gram’ worthy it is and that has raised expectations and made it harder to dodge peer pressure also. This has directly impacted the way we celebrate festivals – for instance, a packet of the humble earthen lamps is no longer considered a worthy gift but an imported scented candle that costs ten times more is received with joy. I am no stranger to this and neither have I been able to eschew these trends.”

Choudhary’s experiences led her to pondering over the need to draft a strategy so that she could enjoy festivals with her loved ones without feeling the pinch of a lighter wallet. “The expenses incurred in the previous year could be a starting point for you to gauge the amount you would need for the next festive season. Secondly, exercising prudence with your festival and celebration expenses can help you save a lot of money. For instance, I learnt that buying gift items in bulk and shopping during ecommerce seasonal sales can be a smart way to restock your gifting inventory without stepping beyond your budget.”

She also suggests creating a separate investment fund for festivals. “The yearly bonus I get during Diwali is channelized into mutual funds so that the investment can appreciate in a year and that capital can help me cover my festival expenses for the coming year. A liquid fund or an ultra short term debt fund is ideal for the purpose. You can also invest a small portion in equities for higher returns,” Choudhary says.

Kanaan Ladha, co-founder of Invest Aaj for Kal says, “We need to understand that this time in the festive season there is a high chance of impulsive buying because our festival celebrations have been dampened for a while due to COVID. So the starting point has to be planning and budgeting. The ball park figure that you arrive at, can be parked in an ultra short term debt mutual fund for better returns till the time the actual expenses start. Also, it is equally important to not give in to the temptation of investing for your other goals for 2-3 months to create more wiggle room for your festival expenses because this way investments can be skipped too frequently and this can be detrimental to your long term financial goals.”

Key takeaways

1. For major celebrations, estimate expenses a few months before you start preparing and include even the smallest ones. You will be surprised to see that a lot of them are unnecessary.

2. Do not go overboard with your celebrations by relying on your credit card or by taking loans. The high interest rates can push you back significantly from your financial goals.

3. In the festive season there is a high chance of impulsive buying because our festival celebrations have been dampened for a while due to COVID. So the starting point has to be planning and budgeting. The ball park figure that you arrive at, can be parked in an ultra short term debt mutual fund for better returns till the time the actual expenses start.

This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.