Buying decisions often turn sour financially because they are ill-planned,
It's that time of the year when the most avid shoppers want to prepare for the best deals. They are busy jotting down the prices companies quote on the goods in the New Year sale. The end-of-season sales are an opportunity to do some real bottom fishing. But this year it could be different. Prices may actually go up all thanks to the news that the customs duty on imported goods such as television and smartphones has been revised upwards.
The increase in prices should affect the shopping plans of a few. The rest will not be affected because either they want to fund their purchases with loans or they have saved enough and can stretch a bit. Loaned money is an easy way out, but financial planners do not recommend taking that route. Instead it makes sense to save money for your shopping. Here are some tips that can be used to fund your purchases in future.
Plan it well: Most of the time, the buying decisions turn sour financially because they are ill-planned. While most of the buyers want to get into the smallest details of the features they want in their gadget, they do not take into account the price tag. More important is you should account for inflation. If you are looking at a vacation that costs Rs 2 lakh today, be prepared to pay for Rs 2.2 lakh next year, all thanks to inflation.
Put a timeline to your purchase: You should define your goal time-wise. It will help you in two ways. First, it will help you to account for the inflation adjusted money value and second it will help you to choose the right investment path. For example, if you want to save money for a purchase that you are planning for six months from now, you should be parking your money into a liquid fund or a bank fixed deposits. If you are keen to buy something five years from now, you can consider investing in good equity funds or a balanced fund.
It is better to invest as you earn. Start a recurring deposit or a systematic investment plan for the desired time-frame.
Do not borrow: Loans are of two types – good and bad. Good loans are money raised for creating assets. So your home loan and education loans are good loans. Business loans too are good. But do not raise money for consumption purpose. Avoid splurging with borrowed money. As far as possible do not go for personal loans or advances on credit cards to fund your purchase.
Earn-save-spend and not earn-spend-save: Most of the times individuals find it difficult to save money for their future purchases or financial goals. The focus on saving after spending their income leads to the situation of inability to invest for the future. However, if you save a certain percentage of income in the desired investment products and spend the rest, then you will be able to build the corpus for your financial goals.Save regularly and do not wait for some magic: Many a time. individuals are waiting for the right time to start saving or they want to start with say a number such as Rs 10,000. But that never happens. Hence one should start saving with whatever amount he can. That will put him on the path to his financial freedom.