Planning for the festive season expenses without hampering your goals

“Rakhi celebration this year was extra special. I was able to celebrate with my sisters after a hiatus of three years. Both of them live abroad and owing to the pandemic they couldn’t come to India for a long time but this time they were around with their husbands and children,” quips Ashish Arora, a 35-year-old software engineer based in Bangalore.It is that time of the year when our calendars get dotted with festivals. Beginning with Rakhi, the string of festivals goes on till Diwali and in the post-pandemic world there is an increased fervor around festival celebrations. India is known as the land of festivals and festival celebrations in India form an indispensable part of our social, cultural, and religious identities.Yes, festival celebrations are a beautiful respite from the humdrum of our daily lives and also give us the chance to break ourselves away from the confines of screens but they are also a major financial overhead. Owing to the sentimental element that is attached to festival celebrations, most people tend to overlook the importance of having a financial plan in place for managing festival expenses.“My wife and I belong to different communities – she is a Bengali and I am a Punjabi. Together we have had to celebrate more festivals than we did individually before we got married because of the cultural differences. While this is something we both cherish because it gives us the chance to observe such festivals which we otherwise wouldn’t have, we realised soon after getting married that this warrants to be a separate chapter in our annual financial plan,” narrates Arora.In India, observation of festivals can entail heavy expenses. New clothes, cash, jewellery, gifts for family members, paraphernalia for religious rituals or delicacies, and sweetmeats – festive expenses can snowball into a major outflow of cash in these few months. Indians leave no stone unturned for these occasions but the awareness about the trickledown effect of festival expenses on other aspects of their finances is largely missing.Arora says, “We acknowledged the need for having a separate annual festival kitty when we estimated the amount we had spent on buying flight tickets for visiting our family during the festive season in the first year of our marriage. Add gifts, clothes, and cash to the equation and the result is bound to give you a jolt. We decided to start putting some money aside and investing it since the beginning of the calendar year so that when the time would come, we did not have to tamper with our investments for our other goals, or tap into our emergency funds or even credit cards for festival celebrations.”Another important aspect of planning for your celebrations is to make a list of the expenses that you would have to incur and then draft a budget. “People tend to leave the shopping bit for the last minute. A little bit of mindfulness can help you save a lot of money there. For instance, my wife and I start scanning e-commerce portals for seasonal sales from the beginning of the year itself and whenever there is one, we buy gifts for our relatives. This way we can get great deals and this also eliminates the need for us to shell out a lump sum amount at once when the festive season kicks in. You should also keep an eye out for credit card offers and deals – cashback offers and reward points can mellow the pinch on your pockets significantly.”Arora has also been leveraging the flexibility offered by mutual funds for creating a corpus for such short-term goals. “SIPs in mutual can be a great way to strengthen your finances for the festive season. It is a good idea to invest in these funds with any amount of money that may be lying idle in any bank account. Also, giving in to the temptation of withholding investments for your other goals for a few months before the festive season to create more room for your festival expenses is a terrible mistake that should be avoided at all costs,” he says.Preeti Zende, co-founder of Apna Dhan Financial Services says, “Owing to the mood that prevails before the onset of the festive season, there is a real possibility of going overboard with our expenses. Laying down a realistic budget is of paramount importance. This will ensure that any extra spending for festivals does not hamper your monthly investments for your other financial goals. You can divert extra cash for festival expenses in a linked FD or arbitrage funds.”Action pointsStart estimating your expenses a few months before the celebrations start. This way you will get the time to review the items that need to be bought and you can strike off any unnecessary purchases from the list.Thrift stores can be budget-friendly as well as an eco-friendly way to go about your festival celebrations. There are plenty of online thrift stores that you can check out for clothes, accessories, and shoes for the festive season.You can use liquid funds also to create a festival kitty – they are low-risk and offer much better returns than a vanilla savings bank account. This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.