The current holiday season is a great time for shopping. Both online and offline retailers have discounts and deals to attract customers this time of year. Since you’re inundated with multiple choices, it’s easy to be tempted to buy things you don’t need.
Uncontrolled shopping urges this season lead to impulse buying and overeating, upsetting your financial plans. If you’re thinking of delving into the festive shopping deals, here are five smart money tips to follow this holiday season.
Plan your festive spending
Like any other financial planning, budgeting is also the key to party shopping. So to get started, start by calculating how much money you should spend on your party shopping. Take into account how much money you will have left over after paying your utility bills and EMIs. You should also assess how much you can borrow with your credit card and other financing options without defaulting later. Once you have a budget in place, try to stick to it.
Understand the difference between needs and wants
When putting together your shopping list, keep your needs and wants separate. Consider products for their purpose and buy only if needed. For example, don’t just buy a new phone because an upgraded version was recently released while your current version is serving you well. The struggle between needs and wants can be controlled through effective budgeting and discipline.
Understand the financing options available
There are different types of financing programs offered by banks and financial institutions to improve the shopping experience of customers. For example, buy now pay later (BNPL), branded credit cards, EMI on debit cards, zero cost EMI, etc. are some of the financing options that have made expensive shopping convenient. But before opting for one, it is important to understand the pros and cons of each. Credit instruments like a credit card and BNPL may offer you an attractive interest-free credit period, but if you do not repay within the specified time, you will have to pay interest or penalties on the unpaid amount.
Likewise, before opting for Zero Cost Equivalent Monthly Payments (EMIs), you should know how they work. Check if this is a zero cost EMI or if the charges have been added to the product price. BNPL is a convenient shopping system for consumers to pay later after making their purchases. It’s a kind of short-term loan that you eventually have to pay back. So, before using this option, assess if you have a repayment plan in place.
Compare prices to get the best deal
It is always wise to compare the price of products online and offline. It is possible that an ecommerce site will give you a better deal on any item, or a local retail store may give you an extra discount. If something is available cheaper online, you can always negotiate with a retail store to match the price and the deals. It is therefore important to do your research before making a decision. Additionally, when shopping online, make sure that you are using a known, secure platform with a known return and exchange policy.
Make the Most of Credit Card Reward Points
Credit Card Reward Points can help you save money by simply redeeming the points you have accumulated from previous purchases. Cashback helps you get money into your accounts when using your credit cards at certain stores and outlets. You can use the reward points to make a large purchase. The reward points will increase as you shop more this holiday season.
Making planned purchases without disrupting your financial stability is best during the holiday season. It is good to focus on shopping as needed and to avoid chasing after our unlimited wants.
(The author is CEO, BankBazaar.com)