Hit By Month-End Cash Crunch After Diwali? Here's How You Can Safeguard Yourself
You can invest a small amount every month for next year’s Diwali expenses as per your budget.
Festivals spell feasting and celebration, but they can often make a huge dent in your pocket if you have splurged and done some big-ticket spending. While the festival season of Diwali is over, many people could be facing a month-end cash crunch in October.
It's common to face a short-term cash crunch after the festive season. However, with a few simple measures, you can ensure your budget doesn't get derailed next time.
Planning a budget for festivals and curtailing expenses can help you sail through November with limited cash. Here are a few simple steps to ensure that you don’t face a similar financial condition next Diwali.
1. Prepare A Budget For Festivals
Take some time to prepare a list of all your expenses during the festive season. You may factor in expenses on gifts, home decor, sweets and clothes, among others, to arrive at a final figure. This will help you assess your total expenses during Diwali. You can estimate the festive budget for the coming year accordingly. Preparing a budget for festivals helps you avoid overspending.
2. Explore Short-Term Liquidity Options
Exploring short-term liquidity options could help in dealing with the post-Diwali cash crunch without impacting your savings and investments. You may opt for buy-now-pay-later (BNPL) service and credit cards to get access to immediate funds. As BNPL service providers and credit cards allow an interest-free period, it could help you to manage your monthly expenses, savings and investments without difficulties.
However, this is only a temporary relief. Solely relying on credit cards or BNPL instruments for regular expenses may lead to a higher debt burden.
3. Build A Festive Fund
Having learnt your lesson this year, a separate fund should be created for big-ticket festive expenses next year. You can invest a small amount every month for next year’s Diwali expenses as per your budget. For example, even a monthly investment of as low as Rs 2,000 per month in SIPs could grow into over Rs 25,000 in a year (at an estimated return of 10% per annum). Even FDs and one-time mutual fund investments for one year could help you build the corpus for upcoming festivals.
4. Review Expenses
During festivals, it’s common to indulge in overspending. You may need to review your expenses and take corrective measures to avoid a cash crunch. Curtailing your lifestyle expenses, like OTT subscriptions, cab rides, dining out, or even a phone upgrade, can help you save more. You can invest the extra money to get your finances back on track.
5. Smart Use Of Festive Bonus
Many people often rely on their savings to meet their financial needs during the festive season. Invest a portion of your festival bonus for next year’s celebrations. Many employers offer a Diwali bonus and smart use of the amount could be a suitable option to build your corpus for the next festive season.
To conclude, a post-Diwali month-end cash crunch may seem challenging. However, plan and follow a financial strategy to enjoy the next festive season without any burden on your wallet.
