Financing The Season of Joy and Giving

by Pria Masson Tanwar

Sat, 07 December 2019

Financing The Season Of  Joy And Giving

Financial expert Pria Masson Tanwar looks at how we spend our festive funds.

In a world of diversity across almost every aspect of life, neutrality is often a coveted state. Globally, one of the few, or perhaps the only, opportunity that provides a neutral space is the end of year festive season. Whether one celebrates Christmas or not, the end of year and new year celebration is a worldwide event. But, like almost all special occasions, events bring with them a certain underlying stress to do right, to experience and share the right amount and, of course, to gift as a way to express the role of the relationship, professional or otherwise.  

Gifting is often considered as an investment in a relationship. However, like any investment, financing that decision adequately and valuing it correctly is almost critical. For clarity here, when I say gift, I am solely referring to the material gifts or any experience that you gift someone that you have to spend money on. So, lets break down why we gift and how that process can add to or deplete us in the long run.

In the process of gifting there is a giver and a receiver. The giver will evaluate the receiver in terms of preferences, habits et cetera and finalise what to give. However, between those two steps is the crucial inherent step of budgeting. In a healthy financial scenario, the gift best suited will be within the budget allocation to the receiver and it’s an easy decision. However, there often comes a time when the relationship is very valuable. Wherein budgets may be low but intentions, emotions and, sometimes in the case of corporate gifting, the need to make an impression, is very high. In these scenarios it’s easy to dip into budgets and reserves or, of course, pay through your credit card (which is like taking a loan) to finance the season of gifting.

A credit card payment is essentially an unsecured loan with a 20-day grace period. It sounds like an easy way to experience the holiday without burning an actual hole in your pocket – but it’s far more dangerous because few people understand the actual dangers. For a credit card payment, as you delay the repayment, the interest charged rises exponentially and there is legal recourse available to the bank. You might think that it’s just BD500 but if it was billed in, say, December, it’s due at the start of your billing cycle. Until the ‘due date’ and if you pay by the due date, there is no interest payable. But, any delay and the three per cent interest rate becomes payable from the start of the billing cycle. When you realise it’s payable, it’s already at six per cent interest rate. And this compounds monthly with every delay. The gift, the investment and all that comes with it, may or may not be as valuable in its benefit to you as the building burden it brings.

Festive seasons are about experiences, no doubt, and experiences often do cost money. But keep in mind this – the very people you are taking the loans for or stressing your finances for may, if given a choice, choose to see you with less stress through the rest of the year rather than experience whatever it is you are trying to finance. Clichés are clichés for a reason – they hold true. Happiness, joy and laughter are free. So, gift that freely. Anything that costs money, needs a rational mind and reasonable, tangible benefit. Perhaps, recognising that could be your gift to yourself this season.