How to be a smart shopper this season
Plan ahead, have a budget and stay the course, no matter how big the discount. Don’t loosen those purse strings without good reason
It’s the festive season, and it’s time to buy gifts for loved ones and yourself. With new sales being announced every other day by e-tailers and physical stores, the consumer is spoilt for choice. Many plan in advance and save up to be able to shop during this time. However, more often than not, we burn a big hole in our pockets by impulsively buying things, and then regretting the purchases later. This, in turn, disturbs our finances and investments.
While there’s no need to stop celebrating, there are various ways to be a smart shopper. Here are some steps you can take to curb over-spending and remain within your budget.
Old trick: have a budget
Mint Money has always advised readers to make a budget as a starting point of any sort of financial planning. So, when it comes to spending for festivals, keep a budget for all your expenses—big and small. “Make a budget and try to stick to it, irrespective of the sale offers. This applies to normal monthly expenses and annual spending as well. You must spend on your basic needs and essential requirements but avoid impulse spending, especially on a credit card,” said Melvin Joseph, a Mumbai-based certified financial planner and founder, Finvin Financial Planners.
Start with making a budget for the big expenses such as painting the house, or buying furniture, jewellery, white goods and such. Then include smaller expenses such as buying clothes. Be as specific as possible, and be conservative.
You could also make a list of people for whom you would like to buy gifts, followed by which presents to give and how much each or collectively these should be worth. You could add in one or two extras for surprise visitors.
Need versus want
There are many things we spend which we want but don’t really need. Vijay Tonk, 28, owner of ThinkTonk, a Delhi-based concept wedding photography company, has decided to not go for the annual house painting this year on Diwali as he felt that it was not needed. He used that money on other things, including phone attachments, iPod and a Fujifilm instant camera. “It is important to sort out the must-haves from something that can be bought later. I try to spend within my stipulated budget and look for offers to make the most of it,” said Tonk.
Think: do you really need a bigger television or a newer mobile phone? “Examine the utility of the product and judge if it is an absolute need or just a desired fancy product that you want to buy. Similarly, examine family members’ wishlists in terms of perceived utility,” said Prakash Praharaj, founder of Mumbai-based Max Secure Financial Planners.
That DSLR camera sure is coming cheap, but do you have the skill to use it properly and also frequently enough to justify the expense? Yes, that coffee maker is just what you wanted, but it also needs a particular type of ground coffee, which may be expensive, and anyway, you mostly drink tea. That six-month gym membership is fitting your budget, but will you really go even for half of that time? These are tough questions to ask yourself, but they will save you a lot of money.
Make sure you don’t already have the product you just purchased on that amazing sale somewhere. Or, you don’t buy a product just because it was cheap even though there was no use for it, like the man who bought a wallpaper scraper because it was cheap, but realised that he didn’t have any wallpaper! The home cleaning drive before the festival may surprise you with forgotten possessions. Instead of replacing an old item with a new one, see if you can do with repairing it.
“While buying a product on impulse, take a minute and think if it is an everyday use item or something you will use just once in a while. If you are not sure about this, then there is a big chance that you will forget about this particular purchase within a few days,” said Shilpi Johri, head, financial planning at Arthashastra Consulting, a Gurgaon-based financial advisory.
Cash or credit
We all know that credit card debt is the worst as it has the highest rate of interest; even as high as 35%. Yet, a lot of us end up maxing our credit limits and then having to choose either the equated instalments or the rolling over credit route to paying off the dues. In both these cases, one ends up paying more than the original cost of the purchase due to interest, overdue penalty, processing fees and other charges. Especially during the festival season, with all the offers of cashback on purchases with a credit card, one tends to overspend.
“I know a person who earns Rs.1.8 lakh per month and still revolves credit on many credit cards due to his passion for online shopping,” said Joseph. If you lack the discipline to control credit card use; don’t use it. Try to pay by cash or through a debit card. Minimise credit card usage or use it only for an amount that you are sure of being able to pay before the next due date.
Often, there are cheaper options available for what we want to buy but we end up buying the more expensive one because we had not planned properly. Make a list of the things you plan to buy during festivals and then look for cheaper options. For example, if you like a particular branded item, compare its prices on various online sites and then choose the best deal. If buying in bulk, for non-branded or customised items, try to go to wholesale markets. “I go to Chandni Chowk (in Old Delhi) to buy Diwali gifts for my clients in bulk and then get my company’s logo hologramed on these. Doing so gives me good value for money because the same thing bought individually from a big store would cost me much more,” said Tonk, who looks for deals to buy photography equipment and has bought an Apple iPhone 6 from Snapdeal during its festive sale this year..
Check for exchange, return policy
You have made a budget for your festival spending, shopped within it and are content with your smart planning. However, what if there is a defect in the purchased item? In the hustle-bustle of festival preparations, the task of returning or exchanging a product or even buying a replacement because the seller doesn’t allow exchanges, only adds to the list of chores.
Therefore, before buying anything, check the exchange or return policy. In most brick-and-mortar stores, goods sold during a sale cannot be exchanged or returned. Even on online stores, while the product to be returned may be collected within a day, the replacement will take a few days if not more to be delivered to you.
“Shop from places where you can easily return the product if not satisfied. Examine the return policy of e-commerce sites before confirming the order,” advised Praharaj.
A festival is a time of joy, good memories, and, yes, good deals. But don’t mar the time with financial burdens that can easily be avoided.
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