Navratras in north India mark the commencement of festivities. People loosen their purse strings for many reasons that could be predominantly cultural—celebration with the family that may include buying gifts for family members and making use of the auspicious time of the year to add materialistic items in your day-to-day life.

Shopping during festivals can be a deep psychological experience, besides addressing your functional needs. Whether you’re a habitual spender or a needs-based shopper, you are sure to buy something even before you enter a store or log in online. However, recognizing whether you are either the former or latter is not a difficult task. When you spend to buy things that you don’t need, you are likely spending to fill a void or to experience certain feelings. This kind of purchase is likely to ruin your personal budget. This habit, if not restrained, may lead you to a financial crisis in life. Let’s understand some of the triggers that can make us do wasteful shopping and some suggestions to deal with them.

Are you saving or spending?

When you see a SALE sticker that says “Save 33%!" it makes your brain focus on the “savings" rather than the “spending". In fact, if you notice, the receipts for purchases you make these days, whether online or offline, often say, “Yay! you saved 1,125 today!" or “Congratulations! You earned 225 store credit points!" And if you had used online or offline promo codes for additional discounts, the savings number would have gone further up. So, in a nutshell, the brain made you feel good about being a savvy shopper! Unfortunately, your brain fell for one of the tricks where the focus went on to savings and not spending.

Managing this behaviour is very simple. You must make a mental note that you never accumulate wealth by spending. It happens only by saving and investing. There is no doubt that promotion codes or flash sales can give you a lower total, but you’re still spending money to purchase the items that you may not need.

Recognize whether you are falling into the trap of spending just because you want to save a certain amount or you are spending because you need the items and buying them now is in your budget.

Is that deal worth it?

Marketers, whether online or offline, play tricks to get you to spend. “Buy two and get the third one free!", “Buy five and get the other two absolutely free!". These stickers are intended to create a value perception in the shopper’s mind. As a shopper, you would always find this an attractive proposition. Even if you need only one, getting a deal when buying three of them together makes you feel good because you got more value for money.

Managing this behaviour requires you to become a conscious shopper. You need to build a habit of taking a “mindful pause" before you make that purchase. Certain questions you can ask yourself to deal with the issue are: “Do I need this?" “What if I wait for a few months?" “How will I pay for it?" “Will my investments be impacted if I pay for it via EMI?". And one big question that may become a deciding factor is: “Would I buy this if it was not on sale?" If the answer is no, don’t buy the item.

Flash sales and FOMO

Flash sales that are offered online or offline during festivals use your sense of panic to make you buy, especially when they make the deals short-lived. When you buy items out of a special deal, you feel a sense of achievement because you’re made to feel as one of the lucky few who grabbed it before the limited stock lasted. This purchase happened out of FOMO (fear of missing out mindset. Also, you might have bought more than what was needed in a flash sale.

Managing this behaviour can be easy too. Stop reading the print advertisements or pop-up advertisements on your gadgets. Unsubscribe your online store emails. Don’t be tempted to check out the price of items that are on sale. Create a budget for your festival. Make a list of items that you need to buy and buy them in bulk, if possible. You may avail yourself of the flash sale only when it meets your requirement. And that is it.

Final word

Have a well-defined shopping budget for the festivals. Investing should always take precedence over spending your financial resources. Only after you have invested as per your investing calendar, the spending budget can be exercised—starting with the necessity items and subsequently moving on to discretionary items that form the list for your festival shopping. And you must stop once the amount spent has met your budget. Happy Diwali!

Amit Kukreja is a registered investment adviser and founder, amitkukreja.com

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