This story is from December 26, 2007

Holiday splash: Plan your spending wisely

Debojyoti Ghosh / TNN / Dec 26, 2007, 00:01 IST

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Plan your holiday spending without affecting mandatory expenses like taxes, children's school fees and other annual commitments.

Holiday splash: Plan your spending wisely

BANGALORE: Praveen Pillai (27), a medical transcriptionist, has lavish plans for the festive season — a Christmas vacation with friends and gifts for family.
This will cost him a fortune and he is toying between pulling out money from his mutual fund saving schemes or swiping his credit card. Either option will dent Pillai's future finances.
Pillai represents today's generation who want to enjoy and feel compelled sometimes to dip into their investments to finance that binge.The festive season is that time of the year when discount tags literally push you to buy products and services.
In fact, 50%-60% of the spending is unplanned and impulsive. Lured by freebies and discounts, that are offered by companies, people end up buying more, which hampers their annual budgets and finances, says Anand KS, wealth manager of Nile Financial Planners, who adviced Pillai to avoid the options he was considering to opt for.

Holidays, gifts, parties and marriages the list of occasions seems endless. With the year-end craze setting in, its important that you plan your budget carefully so that you don’t go overboard with credit card payments and loans. So what's the solution?
Plan your holiday spending without affecting mandatory expenses like taxes, children's school fees and other annual commitments. Including festival spending into your annual financial plan is the most critical factor.

Anil Rego, CEO of wealth consulting firm Right Horizons, says one of his clients used to be an erratic spender. Based on our advice she now makes a budget every January and looks at major expenses she has to cover. She takes into account bonus payments and uses that to meet expenses.
"For the shortfall, we suggested a regular monthly recurring deposit. A lump sum investment of Rs 50,000 would be difficult to squeeze out. She now easily manages it with Rs 5,000 per month," says Rego.
She also manages her tax saving investments by doing a monthly SIP (systematic investment plan) with both unit linked insurance plans and equity linked savings schemes. It saves on interest payments she used to make earlier to credit card companies.

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