“So what are you doing for New Year’s?” You probably will hear this question multiple times in the coming few days. This question is similar to many others that people use as icebreaker. But still these inquiries about your lifestyle implicitly lay the ground for expectations of certain activities — like dining out, vacationing, travelling, or the like as the norm.

With that in mind, there is a great amount of social pressure that comes along with these questions. And every time the answer deviates from the expectations, people place a great importance on others’ perceptions may feel inferior. As a result, some may even be pressured to do some activities just to fit in — similar to teenagers giving in to peer pressure — but somehow in what appears to be an action inspired by others’ recommendations.

These scenarios may not be a problem if you can afford the proposed lifestyle activities, but if you lose track of their budget limitations and act impulsively, the results can be catastrophic. Some of the activities that people often want to brag about can be very costly.

In fact, many banks offer personal loans that target these lifestyle activities — like travel, vacation, etc. Of course, there could be many reasons — other than social pressure — for people to stretch their budgets to include some fun, luxury activities in their lives, but it all comes down to one question: Can you afford it?

Here are a few tips to help you make better decisions.

Better budgeting

If you have a clear idea of your finances and how much money you’ve available for discretionary spending every month, the decision to whether do something or not can be easily made. You also will know how to pick your activities in a way that gets you the most out of your budget.

Keeping tabs on your spending also means that you probably won’t push a big expense on your credit card and just hope that you will be able to pay it off next month. Because a well-planned budget simply guides you to how much exactly you can spend in any given month, stretching your spending in one month clearly won’t be possible unless you decide on which sacrifices you’re willing to make in the future to make up for the extra spending.

No debt

Regardless to what your banker says, avoid debt. If you cannot afford a vacation, for example, and you can’t save for it, you probably won’t be able to repay its cost — or you will have to struggle to repay it, making it many more sacrifices. Is it really worth putting a strain on your budget?

If you still can’t pass on the fun, be sure to plan clearly for how you will repay the loan. Even a small, recurring payment can take a toll on your finances. Don’t look at it in a single payment — for example DH 200 a month, because that underestimates the size of the loan. Think of the annual cost and the full loan amount that includes the interest over the loan term.

In general, you should steer away from getting a loan just to fulfil a lifestyle ambition, especially if you’re unsure that it is a sound financial decision. Never second-guess yourself because you probably have a much better insight into your finances.

Find budget options

There are always fun options that come at much smaller price tags. If you do want to enjoy a gateway, you may look at options that reduce your cost such as low-cost carriers for flights, guesthouses for accommodation and public transit instead of renting a car.

The point is: You don’t have to give up on doing what you want to do, but you can do it within your budget. And while others may be vacationing in five-star resorts, you still will be able to have a good time.

The more you’re in touch with what makes you happy rather than what you can brag about, these decisions will become easier. Even a bowl of popcorn and a movie at home can make for a fine New Year’s Eve.

The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.

Lifestyle pressure

— Think before you spend

— Don’t give in to social pressure

— Avoid debt

— Find less expensive options

— R.O.