Financial mistakes to avoid this Christmas

December is perhaps the most-awaited month of the year. Not only does it give us an opportunity to forget the negatives of the months gone by, it is also the time to celebrate. The world waits for Christmas with bated breath, with the celebrations beginning right from the start of the month. A major reason for Christmas occupying a huge position in our lives is that it helps us spread happiness and joy, giving to those who do not have much. Gifts have become synonymous with Christmas, with people often going overboard with them. Let’s face it, Christmas without gifts is not Christmas at all. Now, gifts = money, and with a number of other financial responsibilities on our heads, it is possible for us to commit a few financial blunders. Here are 5 financial mistakes which we can avoid this festive season, helping us spread cheer not only to others, but also to our bank accounts.

1. Exceeding your budget – When was the last time you went shopping and stuck to your budget? If you can recollect when this was, you probably have excellent control over your urges, but if you can’t you probably have an habit of overshooting your budget. This Christmas, ensure that you make a budget and stick to it. Make sure that this budget takes into account your other financial obligations like home loan EMI repayment, fuel expenses, household expenditure, etc.

Tip: Make a list of all the people who you wish to buy gifts for and allot a certain budget for each gift. This will help you buy only those items which are affordable.

2. Not investing your bonus/cash gifts – As children, most of us received money during festivals and celebrations. As adults, we could receive a Christmas bonus/year-end bonus from our employers. There could also be cases where we get money as gifts. Spending this amount frivolously should be avoided. One might argue that the amount is small and it doesn’t make sense to invest it. But the fact remains that even a small amount invested today can give great returns in the future.

So if you are one of the lucky people who get a year-end bonus do not hesitate to invest this. Investing in mutual funds is a smart option, even if the amount is limited.

3. Not comparing offers – There is a reason for people to say that Christmas is the season to be jolly. Take one look at any shopping mall and you will see discounts everywhere, making this a perfect time to upgrade your wardrobe or buy that new TV for your home. These offers can also make us go crazy. We all know of friends who cannot control their urge to shop, swiping their credit card It is important that you stay calm and make that purchase only after comparing all the offers, for you can save thousands (giving you more money to shop).

If you are one of the shopaholics who can’t get enough of offers, it is a smart option to apply for a credit card which offers reward points on each spend.

4. Exhausting your savings – Christmas is also the time when a number of people renovate/decorate their homes. Doing this can be expensive, but given the festive cheer there is a tendency to ignore these costs. It is possible for people to use their savings for this purpose. While this might not cause any immediate harm, it could create become a problem during an emergency. Therefore one should avoid using their savings for the same.

A smart alternative is to apply for a personal loan and use this money to meet any expenses which may arise during the period.

5. Postponing EMIs – Given the expenses around this time, one might be tempted to postpone existing EMI payments. While this can give temporary relief, it can lead to financial problems in the future. A delayed EMI will have to be repaid the next month, with interest. It is smarter to keep aside a certain amount to pay the EMIs and then utilise the rest for other purposes. Additionally, if payments are missed consecutively, the credit score could be impacted negatively.

Christmas is all about spreading cheer and happiness, and a little extra money can go a long way in increasing this happiness, right? So follow these simple steps and see for yourself the miracles of Christmas.