Diwali Shopping – Treat it like a planned Expense not an Exigency

Diwali shopping planned expense not exigency

Diwali means a whole lot of things, and shopping for Diwali is inevitable. It is that time of the year we look forward to meeting friends and family, decorating our home, gifting one another, and treating our taste buds with every sweet and snack out in the market. Not many families set aside a budget for Diwali Shopping and those who do, stick to it rarely.

Diwali is also a time when merchants and retailers fill the market with goods and offer attractive discounts on purchases. Gadgets and consumer durables are on sale with special offers that lure the buyer to fill the e-carts.  Shopping for Diwali is also a status symbol to many. We wait to boast about the deals we clinched, brands we bought and the designer’s collection we wore for the festival.

The jaw – dropping online deals, make us think that it cannot get better than this. Meet Nandan, the only earning member of a family of five. Diwali is the best time of the year for his wife, children, and his mother. The whole family makes a list of things they would like to buy for Diwali.  His children have already started their Diwali shopping online.  Let’s take a look on all that is there on the list:

The Big and Small things on the Diwali Shopping list

Clothes: These are a must buy for everyone in the family. Well, what can a festival be like without new clothes huh? His wife and mother shopped ethnic wear for an amount of INR 16000/- . Apparels for his son and daughter amounted to INR 7500/-. Nandan doesn’t fancy clothes much and chooses to go without it for the festival.  – Total Clothing Expenditure: 23500/-

Salaries and Incentive:  Nandan and his family employ 2 servants at home. Diwali Bonuses for them amount to INR 5000/- and Incentive for the watchman of his apartment, utility workers etc., amount to INR 1500/- Total Expenditure : INR 6500/

Decorating the home: It’s the festival of lights and it doesn’t hurt to bring some vibrancy and light into our homes. Mrs. Nandan has been eyeing at some very in-vogue and attractive light and diya decorations, cushion covers and curtains on the internet. She decided to give the home a new makeover for Diwali (as she does every year) as she’s invited friends and family home for snacks and dinner during the festive season. She was happy and took pride in telling Mr. Nandan that the same cushion covers and curtains in another leading supermarket last month was 30% more than the price she bought online. Decorations and some small repairs for the new makeover at home came at a Total Expenditure: INR 7200/-

Also Read: Mutual Fund Investment – How to use them to make periodic payments

Family gatherings:  It’s tradition for families to meet and greet one another during the festive season. Our routine lives these days, don’t leave much time to catch up with family and friends, and one wouldn’t want to miss an opportunity that comes with Diwali. Sweets and Snacks for Diwali and food and drinks for these gatherings can be roughly estimated to a Total Expenditure of INR 8500/-

Gifts :  Here comes the best thing about Diwali. Surprising one another with gifts is a great feeling. Nandan let his children buy the gadgets they’ve been asking for over 4 months now and he bought some gold for his wife and for his mother, he booked her a ticket for small yatra she wanted to do. – Total Expenditure INR 38900/-

Nandan’s total Diwali expenditure now stood at INR 84600/- He works as an AGM in a reputed Textile company with a take home of INR 85670/- every month. Nandan estimated close to 50,000/- as Diwali spends. He managed the excess with his credit card and savings. His credit card already had an outstanding of INR 27000/- on which he is paying a revolving annualized interest of 42%

What can we understand from Nandan’s Diwali Spends? Is he spending too much or is it just the typical scene in almost every home when the budgeted expense is always said to exceed by 40% or more. In that case how this is excess managed? Is Nandan digging into his savings or is he using his credit card to pay for the excess?

Well, let’s look at the big picture here. Nandan has to pay for living expenses too every month. Assuming his total household and other expenses amount to INR 70,000/- every month, his expenditure during the month of Diwali is a 100% more. This would a spending of approximately 55000 – 60000/- on his credit card if he has not dented his savings for the excess.

Could Nandan have managed the Diwali shopping expenses better? How?

  1. Saved from the beginning of the year through a separate fund or an RD.
  2. Taken a Personal loan for a small sum of INR 70,000/- where the interest rate is much lower than what he pays on the credit card.
  3. He could have split his expenses over two months to ease out the borrowing on his credit card.

Diwali Shopping expenses aren’t an emergency. There could be numerous ways to spending for the festival and still staying well within the budget. Most importantly, it is essential for every household to make a list of the expected expenditure irrespective of its nature. It is the only way to arrive at the exact or close to exact budget.

This article has been contributed by Right Horizons

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