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Do you show shopaholic tendencies during a sale? Be careful! - Outside View by PersonalFN

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Do you show shopaholic tendencies during a sale? Be careful!
Jan 27, 2015

You enter any shopping mall or a well-known store, there are sales running almost everywhere at present. Shops are gushing with customers frantically trying to buy discounted items. The notion that you might lose on some really good bargains while others are making the most of them might lure you to shop things during such times.

Remember that, while shopping during a sale is not a bad thing, it must be undertaken only if you genuinely need to purchase things and not merely because they are available at a discount. If you buy something just for the sake of it without assessing your needs, there are slim chances that you will actually use it later, resulting in a complete waste of money. For instance, shops might have offers such as "buy 3, get 1 free". Looking at this you might be enticed to buy 3 things, just to get that 1 thing free, irrespective of the fact, whether you even need those 3 things in the first place.

More often than not, stores adopt gimmicks to entice people to visit them and purchase things. There might be large hoardings outside the store stating 50% discount offers. However, if you look closely, in a very small font they would have mentioned "upto", which means not all stocks inside the store would have 50% discount, but only limited ones. But just to avoid losing some opportunities, people crowd such shops / stores and purchase things just because others are doing it.

Does this mean you should never purchase things during a sale? No, that is not what we mean. In fact, if there are certain things which you wish to purchase and you know that the sale season is arriving, then you must wait for it to make your necessary purchases. However, indulging in a shopping spree just for the sake of it can harm your long term financial health and your important financial goals such as retirement, children's education and so on, may also go haywire.

Shopping may give you instant gratification, but you must ensure that it doesn't take a toll on your priorities. Remember that, if for the heck of short term joy you let go the bigger objectives in life, then you would be doing harm to the long-term financial well-being of your entire family. PersonalFN is of the view that, as much as earning good returns on your investments is important to you, curtailing avoidable expenses too is important. When you shop more getting attracted by offers and discounts, you probably save less and invest lesser. It is imperative that you first save for achieving financial security and then spend on lifestyle and leisure. This does not mean that you should sacrifice all your wants and desires, but it just means that you must plan for them in a prudent manner. PersonalFN believes that if you chart an appropriate financial plan and be determined to follow it, then you will not only be able to achieve your financial goals but also enjoy a comfortable standard of living.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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