Today marks the official First Day of Summer, and as Spring comes to a close, we have now come fully out of hibernation, stretched our legs, and are looking forward to backyard barbecues, time with family, and beautiful Summer weather!
- And Summer travel…
- Summer camps…
- Sports…
- Shopping…
- Projects
- Concerts…
- Festivals…
- Theme Parks…
- WEDDINGS!!!!!
Add it all up and it’s easy to understand how Summer spending can quickly get out of hand!
Take an Inventory
The first step is always to track your spending. If you don’t have a good system in place, start by reviewing your bank and credit card statements at the end of each month. This can help to set a baseline so you’ll know on average what you’re spending and where it goes. Where we spend our money is a big indication of what’s important to us, and if you’re surprised by what you see, maybe your spending isn’t aligned with your priorities. You can use tools like Mint.com for yourself, or work with a Financial Coach to keep tabs on your cash flow and set up strategies to balance spending and saving.
As we stand on this line between Spring and Summer, it’s the perfect time to take inventory of your fixed financial commitments and debts. In order to come out of the Summer season unscathed, these prior commitments can’t be ignored. Whether it’s lingering credit card debt from December, or an unexpected tax bill in April, make sure to factor these past expenses into your Summer budget.
Use a Dedicated Savings Strategy
Once you know what’s coming in each month and you’ve inventoried what’s going out, it’s time to direct the surplus! Often times it makes sense to allocate more toward debts (specifically credit cards) to get those paid off more quickly. While I applaud this all-in approach, if you’re only servicing the debt without building a baseline of savings, an unforeseen emergency or Summer expense will go right back on your credit card! Instead, give yourself some leeway and commit a portion of your surplus to accumulating a comfortable level of savings.
Give a purpose to each dollar you save. You don’t need to open a separate account for each goal, but it’s easy enough to do on paper. Tape a list to your refrigerator outlining each trip, major purchase, concert ticket, sporting event, wedding gift, etc. that you feel should be saved for in advance. Assign a specific dollar figure to each. Every payday when you make a regular and intentional contribution to your savings account, assign that amount to one of the spending goals. Literally write it down… with a pen.
Each Trip Gets It’s Own Budget
It’s easy to set out on a vacation blind to the total cost. Most times we start with flights, later we book a hotel reservation, and we don’t usually plan ahead for much else. After all, we’re on vacation and we’ll deal with it later! It’s easy to use “vacation” as an excuse for overspending (#YOLO), and when each purchase is made without consideration of each other , it’s easy to blow past your expected cost. I’m not the vacation police here, but planning ahead can alleviate the guilt upon your return.
I like to budget ahead of time for travel and lodging, and also to leave plenty of room for dining and imbibing! Each trip needs it’s own budget, because to come out ahead we must take the trip we can afford. When you budget for your trip, do so in the context of your other savings and debt commitments. Through the process you’ll uncover if you can afford to fly, or if driving is the smarter choice. You can also decide between a hotel or to share an AirBnB. (Increasingly my preference!) If Hawaii isn’t in the cards this year, maybe South Florida is a budget friendly alternative. Or if you’re in Midwest like me, a trip to the Lake. And if you can afford to take your dream vacation with respect to your debts and savings, then by all means go big!
Avoiding the Summer Spending Trap
Budgeting gets a bad rap, but it’s not about restricting or limiting yourself. Rather it’s actively deciding to spend on what’s important to you, to skimp on what’s less important, and to be responsible to past expenses and future goals. It’s being proactive, planning ahead, and keeping your debt in check. If you follow the steps above you’ll have a good chance to out of Summer unscathed! Which is good, because following Summer, the ultimate spending season is right around the corner: The Holidays!
If you’d like to learn more, reach out to me on Twitter or send me an email. You can also subscribe to the Tandem mailing list to stay up to date on what’s going on. I’d love to hear from you!