How To Spend Wisely This Year-End

We all spend during the year-end. But the trick is not to overspend or borrow, either from friends, or your own investment, to fund your indulgence. Maintaining balance is the key

- LARISSA FERNAND

There is something magical about the end of the calendar year. The weather becomes much more pleasant, and Indians welcome the break from the sweltering heat. But more than that are the festivities that bring the cheerfulness. It starts with Navratri, Dussehra, Diwali, Halloween, Children’s Day, Thanksgiving, Christmas and New Year. Besides the festivals, there are also weddings, and wedding anniversaries.

I don’t think any of us celebrate all of them. I certainly do not celebrate Halloween or even Thanksgiving, and never step out for new year celebrations. But that does not mean I don’t participate in the lightness in the air, or celebrate others.

All this means that money will be spent. Either on hosting home celebrations, gifting at festivals and weddings, decorating the house, buying new clothes, distributing sweets, buying jewellery, or travel.

Clearly there is the impetus to spend more during this time of the year. And while the stock market has been extremely volatile from October 2024 onwards, the last bull run made many of us wealthier than before. Our portfolios have swelled, making us feel absolutely fabulous about it. This is known as the ‘wealth effect’. It implies that individuals spend more when their wealth increases, though their income does not.

Since I quit my full-time job this year and have become a freelancer, I can honestly say that my income did not increase. But my net worth has, making me feel much richer.

Besides the obligations, feeling rich makes us more vulnerable to overspending at this time. So how do we enjoy ourselves without putting our finances in a mess?

Obligatory Spending: Be Flexible

Obligatory spending cannot be avoided. Take a family wedding for instance. And this may corner the bulk of expenses if you take into account the cost of travel for the wedding, buying new clothes, and gifting the couple.