Financial tips to bear in mind this holiday season

The bling of fairy lights on the Christmas trees, the wafting aroma of plum cakes, and the echoes of peels of laughter mingling with Christmas carols – the holiday season is less than a month away. This time the Christmas and New Year celebrations are bound to be marked with pomp and show. Whether you are planning a vacation with your loved ones during the last week of the year or plan to spend it indoors soaking in the warmth of the company of your friends and family members; tis truly the season to be merry.

It is also that time of the year when we all tend to let loose - diets, workouts, and routines are given a miss and they are pushed into the category of resolutions for the coming year. On the financial front, strings of our wallets open up too. Be it Christmas get-togethers, gifts for your family members, or the concerts, pop-ups, and movie tickets that people queue up for at this time, for most of us expenses pile up during the holiday season. Here are a few tips to keep your holiday spending in check to avoid financial stress later on:

Plastic is a double-edged sword

The itch to swipe the credit card can feel too overpowering. You may find yourselves reaching for the card more frequently at this time of the year than you normally do and the illusion may keep popping up that the credit card bill can be comfortably dealt with later on. But here’s the thing: the money is ultimately being spent from your card because sooner or later you would have to pay the dues that you would rake in by going overboard with your holiday fun. Also, credit cards can carry high-interest rates and in case you miss a payment deadline you can accrue a lot of charges on your card. While it is okay to end up spending a little extra, you should try to not deviate too far from the 30 percent credit utilization ratio.

Making merry the DIY way

It is important to remember that the holiday season comes merely four weeks after Black Friday – the day in the calendar year we all wait for because we can finally move products from the wishlist to the cart owing to the spate of jaw-dropping discounts. Unsurprisingly, most of us end up with a budget in tatters after Black Friday. Your spending during the last few days of the year should be done in a way so that you don’t end up having to tap into your savings and investments after two consecutive months of extra spending.

On another note, the Black Friday sales are a great time to strike off items from your Christmas shopping and gifting list. However, if you failed to jump onto the discounted prices bandwagon, you don’t necessarily have to spend a bomb. Handmade gifts are a great way to fulfill your gifting obligations on a budget. A DIY gift is more memorable and shows that you actually made efforts to gift your loved ones. The same idea can be applied to your celebrations too – a get-together at home with home-cooked food can be much easier on your pocket than hosting soirees at restaurants. You can also organize potlucks to give everyone the chance to show off their culinary skills.

Creating a dedicated financial plan for the New Year

Being realistic with your habits and goals is a crucial element in maintaining healthy finances in the long run. Trying to save and invest during the holiday season is a next-to-impossible task for most of us. Of course, even during celebrations, the goal should be to minimize wastage but it is okay if you are giving your saving and investment routine a miss during the holiday season. However, the holiday season can be a good time to review your current financial plans and think of strategies for the coming year. You can put together a rough outline of your goals and priorities for the upcoming year.

If you are new to the world of investments, you can start your financial journey this Christmas by investing in mutual funds. The investment process is easy and the spread of mutual funds is such that there is something for all investors irrespective of their risk appetites and goal timelines. From high-risk equity mutual funds to secure debt funds to hybrid funds that let you have the best of both worlds – the right mutual fund investments can make a world of difference to your finances.