Given the COVID-19 fatigue resulting from the restrictions of the past 18-20 months on normal, coupled with a declining trend of cases and rapid pace of vaccination in recent times, most people are eager to make the most of the upcoming holiday and travel season.
With the easing of restrictions imposed earlier on travel and hospitality sector, both domestic and international travel is set to resume. And the holiday season means that the spending season is on too! Time to consider a few aspects so that it does not a burn a big hole in the pocket, one that takes a long while to mend!
To avoid the stress, creating and adhering to a budget is the first important decision to make. Not only will a vacation budget plan help lessen your pressure, but also hold you back from overspending and potentially piling up debt this holiday season.
Learn how to begin budgeting for a holiday in order to enjoy it to the hilt and also keep the guilt away:
Start making the list of vacation expenses
It starts with a list. Start by making a list of all of your expected holiday expenses. In addition to the gifts for friends and loved ones, consider food, stay, local transport, visa (if required), travel insurance, among other things.
Tip: Now is a good time to start stashing extra cash so you can be ready for the additional spending, either in a saving or current account with a bank that offers the best interest rates.
Decide on your spending limit
Since you know where your money is going, decide the amount you will have access to, in order to cover the vacation expenses. Thoroughly work on your budget and choose how much funds you have to spend. Ensure that you use only the money that you have set aside in your spending plan.
Tip: Choose a credit card with minimum Interest charges and repayment terms in addition to competitive cash-back program that earns you additional money on your spending.
Track your Purchases
When the holiday season begins, keep track of all the spends. Carry your gift list along with your budget sheet on each shopping trip. Moreover, be sure to keep track of the cost of your vacation-related trips and other spends. Tracking spends is the key to adhering to your budget.
Tip: Liquid funds are a great option as it allows you to withdraw money without any exit load or penalty. At the same time, it offers bank FD-like returns.
How you spend and save for the holiday season will depend on the personality you choose to be – impulsive or thoughtful. However, if you plan ahead, chances are you will make a conscious decision and reduce the financial impact of the holiday on your annual budget.
Underneath are a few other ways to cut back on spending during the holiday season:
Take advantage of sales: The pre-holiday sales that numerous retailers offer is a great way to get ahead on your shopping and save some cash. Reviewing your list and the deals ahead of time can help you maximize your savings.
Start saving early: If you put aside money each month to cover your holiday expenses at the very start of the year, you will stress a lot less about your holiday spending when the time comes. Review the previous year's budget to see how much you spent, then divide that number by 12.
This is how much you need to put aside each month in order to cover the next year's holiday spending:
You can start by investing a fixed component every month in a Recurring Deposit with lucrative interest rates offered by select banks
Mutual Fund SIP is another alternative that offers flexibility and high returns to suit individual needs. You can enjoy a stress-free vacation if you have planned your finances well in advance.
Conclusion: Due to Covid-19 pandemic, most of us encountered mental weariness. Now, we have learnt to make pandemic protocols and safety measures a part of our lives. Given the experience, we are likely to keep up the discipline without throwing caution to the wind. Just like Covid-norms, a few financial norms can protect our financial well-being while we make the most of this holiday season!
So, stay on course, start planning and have a happy Holiday!
The author, Ashish Misra is COO, Retail Banking at Fincare Small Finance Bank. The views expressed are personal
(Edited by : Anshul)