Planning expenses: Why one must get over Diwali mood soon

Lovaii Navlakhi
International Money Matters

Hello Friends,

I don’t know about you but I am definitely going through post Diwali blues – all that time with friends and family, amazing food (particularly the traditional Indian desserts), money won and lost in cards, the whole festive atmosphere makes me wish for a year long Dussehra-Diwali. Alas, that can’t be…but wait, Christmas and New Year is just around the corner!

So the buzz is about detox diets and spring cleaning of not the house this time, but of one’s self or body to get back to being slim and trim before Xmas and New Year parties.

Green tea and salads, I hear, are the way to do it.

Another tip or tips that I would like to share with you concern an area which also gets deeply impacted by Dussehra – Diwali; you guessed it right – it is your finances.

I am not going to tell you to not spend, to not buy things that you want etc. What I am going to tell you is to plan everything. There have to be pleasures in life like buying clothes for yourself and your family members, stuff for the house - new linen, new appliances, and gifts for friends and family at the very least. Festivals are for celebrating life, celebrating family and you can’t do that without spending some money atleast.

Planning such expenditure, reviewing where it will come from, how to manage the regular expenses from the balance, etc. will give you a greater control on your finances and make you responsible as well. Ideally, this is an exercise you and your partner should do together atleast a couple of months before the festival period.

List down how much you think you will need, add another 15 percent as buffer and start creating this festival fund. Even if you haven’t done this till now, you can start from next year. In fact I would say, use this Diwali’s expenses as a blueprint, add 5-6% for inflation and there that’s the festival fund you need. You can start putting aside money for this from April 2014.

Now, simply take stock.

• Calculate your current cash position. How much is money left for the expenses for the rest of the month?
• What has been the expenditure on your credit card? When is it due? Is the current cash balance + salary of next month enough to clear the outstanding amount? If required, take a loan from near and dear ones but pay off the outstanding balance. Don’t let it build up.
• List out gifts received in kind. Keep aside what you can’t use and pass on as gifts for upcoming birthdays and anniversaries of your family and friends. Just make sure you don’t gift back the thing you have received to the person who has given it to you.
• Have you got extra savings courtesy cash gifts or Diwali winnings? If yes, use it wisely. Either buy a genuinely required big ticket item, invest in gold or payoff the credit card outstanding balance. If you are short of cash, this is a moot point,of course as you will need this cash to meet your regular expenses.

Diwali is over but you can still light the ‘Diya’ of common sense and make sure your finances atleast, stay fit!