Dussehra is a festival of lights, joy and new beginnings. It celebrates the victory of good over evil with the defeat of Ravana, and leaves us with life lessons that can guide us towards a successful life.
The festive season also brings attractive discounts on e-commerce platforms for mobiles, accessories, electronics, perfumes, clothes and more, which can lead to unplanned expenses. Easily available credit offers and loans add to the temptation, and without proper planning, such spending can strain household budgets and push families into debt.
The key is to plan festive spending and manage debt well in advance. This Dussehra, here are five practical personal finance rules to help you fully celebrate without compromising your long-term financial goals.
5 personal finance rules to follow this Dussehra
1. Follow the 50-30-20 budgeting rule
The 50-30-20 rule is a simple and widely known budgeting method that can keep your finances in check during the festive season. Under this rule, 50% of your monthly income goes towards essentials such as groceries, rent and EMIs, 30% towards discretionary spending, and 20% towards savings. Festive shopping should come out of the 30% discretionary share, not the other two.
2. Keep credit card utilisation below 30%
Keeping credit card utilisation at 30% or less helps you avoid overspending and keeps your debt in check. For example, if your credit limit is ₹3 lakh, try to keep the outstanding balance below ₹90,000. This approach supports a healthy credit profile and a high credit score.
3. Set a festive spending limit
Set a clear festive spending limit and stick to it. Write down the figures, prepare a shopping list based on your actual needs, and track spending against it. The aim should be to end the festive season debt-free.
4. Protect your emergency fund
An emergency fund is essential for unforeseen events such as medical expenses, surgeries and accidents. Keep a dedicated fund equal to 3 to 6 months of your monthly expenses, and do not dip into it for festive spending. For example, if your monthly expenses are ₹1 lakh, set aside ₹3 lakh to ₹6 lakh separately.
5. Automate savings before spending
Automate your savings, mutual fund SIPs, fixed deposits and other investments so that they are debited from your bank account automatically. This builds discipline in both your daily finances and your investing, and helps create a healthy retirement corpus. If you are unsure, consult a certified financial advisor to plan your long-term investments. Do not postpone investments because of the festivities.
In summary, Dussehra is a festival that offers an opportunity to overcome unhealthy money habits, a lack of financial planning, and old patterns. It can provide them with a platform to celebrate the festival meaningfully while also managing finances responsibly.
Thoughtful spending, long-term planning, disciplined saving, and responsible credit use are key practices that can help an individual enjoy the festivities while keeping their financial future on track.
Disclaimer: This article is for general information only and should not be considered financial advice. Consider your financial circumstances and consult a qualified financial adviser before making financial decisions.
