Summer can be a pricey season with all the fun activities and destinations to enjoy. If your summer adventures have taken a toll on your wallet, it might be time for a financial reset.
The great news is that getting back on track can be straightforward.
Baddie, the voice behind the popular finance blog baddieandmoney, offers straightforward advice with AtoZ Markets to help you get back on track after the holidays.
Here are 7 easy fixes to get your wallet smiling again:
Reassess Your Budget
First, she advises, reassess your budget. “By reviewing your summer expenses, you can identify what areas you've overspent on and adjust your budget accordingly for the upcoming months. For example, did lots of shopping in summer? Set a strict budget on yourself to minimise retail shopping by half for the upcoming months. Use some of the budget tracker apps to review your holiday spending. Those tools help you keep track of income and expenses and can show you where you might have overspent. Also, they automatically calculate every entry and even calculate your net worth for you. However, there are lots of excel budgeting sheets out there online or budgeting diaries that also are great for tracking your finances. It is your personal preference at the end. Adjust your budget for the coming months based on these insights.”
Focus on Essential Expenses
Recognise which expenses will go up and create a strict budget so you don't end up overspending, like for the power bill - you may find that as the weather is getting colder now that summer is over, you're going to have to use the heater more. You can always find alternative ways to help reduce the power bill such as wearing thicker layers of clothes, getting warmer blankets, using a hot water bottle to warm yourself in bed than an electric blanket, always wearing socks, etc.
Avoid Impulsive Purchases
After every season, it is easy to get excited for the new month and think, "I need a new trendy coat for winter" and fall back into impulsive spending habits. No, you don't need a new trendy coat. Think twice before spending your money on unnecessary purchases. Wait a week if you want to buy something that you think is essential, and if the item slips your mind in the time being, maybe you don't need it after all because if it was important, it should've been on your mind the entire time. Ask yourself, can you live without the item? Will not buying the item genuinely deprive you? When going back into a regular routine, consider all the essential costs and adjust your budget to account for these expenses. Think about your power bills that will increase because of the heater, back-to-school or work costs, transportation, parking, etc.
Plan Ahead for Back-to-School Costs
If you’re preparing for back-to-school season, plan ahead. “Create a sinking fund during the summer months so that you have enough funds to return back-to-school. The sinking fund should cover supplies, co-curricular activities, uniform, stationery. You could make a list of necessary items and prioritise them to avoid overspending and buying non-essential items. Take the most out of shop sales and discount codes.
There are always lots of sales when it is closer to school season and so wait for those sales to come on before buying new stationery and such. Sometimes, students depending on where you live or what school you attend receive discounts if you show your student ID which is beneficial for saving money as well”.
Rebuild Your Emergency Fund
Finally, Baddie advises to work on rebuilding your emergency fund. “An emergency fund is essential for every person. The best way to build an emergency fund is to set up an automatic transfer to your emergency account every pay to make saving a lot easier. Otherwise, you can manually do it too if you have a strict money routine you follow and it works. An emergency fund is a savings account specifically set aside for unexpected expenses or emergencies, such as medical bills, car repairs, job loss, emergency flights, etc. The goal is to have enough funds in the account to have you covered for 3-6 months' worth of living expenses so you're able to tackle unexpected situations without financial stress and/or going into debt. After each season, in this case summer, look for areas you can cut back on with your spending and redirect those funds to your emergency fund. If you have any extra money coming in because you took up a side-hustle or tax refunds, chuck a portion of that money into your emergency fund too. The faster you build this fund, the more financially secure you'll feel and it feels amazing to know you don't need to rely on anyone for money”.
Set New Goals
If you're thinking about your next holiday once the summer months are over, start a sinking fund which is a savings strategy where you can set aside money over time to meet your goal in a certain timeframe. That way, you're able to book your next trip without the financial stress of not being able to afford the trip when it's time for your next vacation.
Increase Your Income
A spokesperson from AtoZ markets shared: “Start by reviewing your holiday expenses and creating a detailed budget. This will help you understand where your money went and identify areas where you can cut back. Choose a category where you can easily cut back, like reducing your dining out budget by 20% this fall. Set a budget and stick to it. If possible, explore ways to increase your income, such as taking on a part-time job, freelancing, or selling unused items”.
In conclusion, regularly review your budget and spending habits (we advise weekly) and make adjustments as needed to stay on track and ensure you're meeting your financial goals. By following these steps, you can effectively manage your finances and get back on track after the holiday spending spree.