We are in that part of the year when festivities take over. Nine days ahead of Navratri incarnations of Goddess Durga are worshipped across India. During this auspicious time many people plan to purchase homes, appliances, cars, etc. Most consumers buy goods by swiping credit cards or availing of EMIs.
In 2013, Indian consumers spent 25 per cent of their monthly salary on Diwali expenses. As per the latest media reports, the Indian e-commerce industry was already seeing a 30 per cent increase on average daily sales with people preparing for the festival season.
Under circumstances, it is critical for shoppers to understand their financial health, define what to purchase and its mode of payment. Hence, between Diwali presents, eating out and visiting family; don’t forget to keep track of your spending over the festive season.
Here are few tips
Stick to a realistic budget
It’s important to have a good understanding of how much you want to spend before heading out to the shops for festive buying. This will help you make smart decisions on your purchases during festival season and avoid any surprises! Make an honest assessment of your financial limits for this festive season.
Plan your gifts in advance
Make sure that you don’t overspend when buying gifts. Allocate an amount you can afford per gift and stick to it. If you want to limit your impulse spending, a list can be a great way to do so. The list will help you quickly identify sale items.
Use your debit or credit card sparingly
There are attractive offers on credit cards during festival time. It is recommended that you use your credit cards prudently and remember to pay-off all the bills on time to avoid any impact on your credit score. A good credit score will enable you to utilize credit on better terms in future
Compare online
It is important to compare prices of goods offered by different sites before ordering online. By comparing prices, you will be able to identify the best deals and help you score on savings. It is advisable to use your debit / credit card cautiously and use only one card during the shopping season to avoid any identity theft.
Plan holidays in advance
Booking travel in advance will enable you save some percent of accommodation and travel tickets expenses. Also, an advance registration for Christmas or New Year parties will ensure that you have the reservation in the right place and that too at a discounted rate.
Check your balance regularly
With all the spending, it is advisable that you keep checking your account balance and credit card spend regularly to avoid surprises. This will ensure that you are spending as per the budget and plan for festive spend.
Access your score
Dusherra - Diwali is a time when many people like to purchase homes. Many consumers buy them on EMIs. Check your credit score / credit history before making this decision. Accessing your credit score before applying for a home loan may actually give you better bargaining power with the lending institution for availing the loan at better terms and conditions.
You can reach out to Equifax or CIBIL if you want to know your credit score. Festive season comes with offers by car dealers / lending institutions to attract buyers. Just like it is advisable to check your credit score / credit history before deciding to purchase a home on loan, it is advisable to refer your credit standing when going in for a car purchase on loan.
Planning for year ahead
Don’t let the festive season stop you from planning ahead for your other goals. Plan for the year to come and its associated expenses. Prudent planning clubbed with cautious use of credit will ensure a bright financial health this festive season.
(The author is Managing Director, Emerging Markets at Equifax)