The festive season is not just about giving and receiving gifts but also an ideal time to embark on new beginnings, especially when it comes to managing your finances. It’s that time of the year when families and friends come together, creating joyful memories and strengthening bonds. However, it can also put a strain on your financial resources, particularly if you’re generous by nature, readily spending on your loved ones without much thought. It’s only after the festivities wind down that you realize you may have gone a bit overboard.
Thankfully, personal finance offers solutions for various situations. You can proactively plan for future expenditures, such as gift-giving. If you enjoy showering your loved ones with presents, consider starting early by setting aside a small sum each month into a dedicated account. This could be as simple as a systematic investment plan in a short-term debt fund or a liquid fund. Managing your finances ahead of the festive season can leave you feeling financially empowered. Consulting a professional financial advisor can help you select the right investment vehicle for regular gifting.
Moreover, the festive season can serve as an opportune moment to initiate new financial goals and engage your family in these discussions. It’s a fitting time to think about saving and investing while enjoying the season’s festivities. You can plan for a holiday destination in the coming 12-18 months and involve your family in mapping out the financial aspects. Encouraging your children and spouses to develop saving habits can prove invaluable. It’s not just about the money you invest; your ability to curtail excessive spending can also contribute to your holiday fund.
A thorough conversation with a financial advisor before the festive season can help you chart your financial course for the next 12-18 months. This way, you’ll have a clear understanding of your spending limits. If your future financial goals require discipline, the current festive season is an excellent opportunity to start managing your expenses more judiciously. You can also initiate new systematic investment plans tailored to specific objectives.
For those who haven’t considered retirement planning, now is a great time to take the first step towards securing your financial future. While envisioning retirement might be daunting when you’re young, making small contributions over 20-25 years can create a substantial financial safety net. The National Pension Scheme (NPS) is a promising starting point. Investing in index or exchange-traded funds can help you outpace inflation over the years. Your investments should ideally yield returns higher than the prevailing inflation rate, and NPS primarily invests in index funds. Considering the historical growth of indices like the S&P BSE Sensex, a regular investment over two decades or more can be a game-changer.
For new parents, the festive season offers an ideal window to begin planning for their child’s higher education. Even though it may be 15-18 years away, starting a fund now can help mitigate the escalating costs of overseas education. In another 15-20 years, these expenses will likely be significantly higher. By consistently contributing over the next 15 years, you can build a substantial fund to support your child’s dream career.
Your health also deserves attention during the festive season. Consider investing in a healthcare fund that goes beyond your medical insurance coverage. Establishing a medical emergency fund with regular contributions can provide peace of mind for your family’s healthcare needs. As you age, healthcare expenses can escalate and surpass your insurance coverage. You can think of this as a ‘well-being’ fund and continue contributing to it over time.
Remember, managing your finances requires effort and intention. Each time you contemplate spending, also consider ways to save and invest. By striking a balance between your income and expenses, you can minimize borrowing and maintain a surplus throughout your life.