It is that time of the year when you either look to give gifts or collect them. Festival season every year brings together your family, friends and everyone who matters to you. It can also strain your finances. When you are a ‘giving’ soul, you do a lot of heavy lifting for others. You spend money on your loved ones without blinking an eyelid. It is only at the end of the festive season you realise that you went a bit too far.
Personal finance has a solution for all situations. You can plan for every expenditure in the future. If you are a person who loves to give gifts to people, you can start early and put aside a small sum each month in that account. It could be a simple systematic investment plan in short-term debt or a liquid fund. Managing your money ahead of the festive season can make you feel good. A professional financial advisor can help you find an appropriate asset to invest regularly solely for gifting.
The festive season is also an occasion to start something new. You can talk to your family about creating new financial goals. It is an appropriate time to think about saving and investing while spending. You can decide on a holiday destination in the next 12-18 months and plan your finances with your family. You can encourage your children and spouses to inculcate saving habits. It is not just the money that is invested that matters. Your ability to curb excess expenditure could also contribute to your holiday pool.
A detailed conversation with your financial advisor before the festive season can help you organise your finances over the next 12-18 months. That way, you would know the extent to which you can spend. If your financial goal in the future needs you to be disciplined, the festive season this year is an excellent time to start controlling your expenses. You can also create new systematic investment plans for specific goals.
If you have not considered retirement, you can take that first step of paying yourself. When you are young, imagining an issue like retirement is challenging. However, a small contribution towards retirement over 20 to 25 years can go a long way in creating a financial security blanket for you. The National Pension Scheme, or NPS, is an excellent first step. If you have not tried it, it is perhaps the right time to get going. Investing in index or exchange-traded funds helps you beat inflation in those years. Your investments must be higher than the prevailing inflation to help create wealth. Through NPS, you are primarily investing in index funds. The 30-share S&P BSE Sensex was around 100 in the 1980s, 3000 in 2000 and 65000 in 2023. It is a force multiplier if you invest regularly for at least 20 years.
If you are a new parent, the festive season is the right time to examine your child’s professional education. That is 15-18 years away, and you can quickly start a fund. The cost of sending your child overseas is spiralling. In another 15-20 years, it will be much more than today. You can easily make a small contribution over the next 15 years and create a pool for your child’s dream career.
Your health needs your attention, too. You may want to invest in a fund beyond your medical insurance this festive season. A small contribution towards a medical emergency fund could secure your family’s healthcare. You can also keep contributing to that fund for your expenses as you age. The cost of treatment can quickly spiral and go beyond your insurance coverage. You can call it a ‘well-being’ fund and start contributing to it.
Your money needs your effort. Every time you think about spending, you must think about ways to save and invest. That way, you can strike a balance between your income and expenditure. You can keep your borrowings to a minimum and maintain a surplus throughout your life.