4 ways to keep summer spending fun and debt-freeJul 22, 2020
After a particularly long four months of staying at home, Canadians are definitely in need of some summer fun. With pandemic restrictions now easing across the country, your summer spending plans might be feeling the need to make up for lost time. But it’s easy to get carried away and lose track of your spending. Have you had a chance to plan your summer spending budget?
Summer has a way of lifting our spirits, making us more carefree and sometimes less careful with our spending. But you can still take advantage of the good vibes while remaining true to your financial goals. Enjoying life and living within your means is all about finding the right balance.
On that note, here are four money management strategies to keep in mind over the next few months.
1) Get by with less and budget for the good stuff
In many ways, the coronavirus restrictions were like an imposed spending detox. For many families, spending was focused on the essentials. You may even have come to the realization that that you can get by with a lot less than you normally do. As the economy opens up, continue revaluating which have-to-haves you really care about and which ones you can do without. Maintaining a healthy relationship with money requires some give-and-take.
2) Reallocate vacation funds to supplement your summer spending
For many households, reduced outings and fewer occasions for socializing have led to an increase in spending around the house. Ensuring comfort at home has been key to coping with the restrictions. One way to maximize summer fun is to reallocate your vacation funds toward improving your stay-at-home experience. This is a great way to adapt to the new normal, as air travel is likely not going to be the same for some time.
Try to avoid putting discretionary expenses on your credit card or dipping into your line of credit. Establishing a budget is still necessary so that you avoid accumulating additional debt. Try dividing your summer spending into different buckets. If you’re overspending in one area, you can trim somewhere else. You can also focus your time and money on the activities that bring you the most joy and the most value.
3) Keep building up cash reserves to avoid debt
When you think about it, summer should be the cheapest season to have fun. You can enjoy most activities for free and you don’t have to go far to enjoy great weather. If you are able to, try to save as much as possible. And in terms of the COVID-19 crisis, we aren’t out of the woods yet. Future lockdowns are still a possibility and the job market is still uncertain. Emergency savings are an essential part of staying debt-free. If you can, continue building savings and avoid making any large non-essential purchase. Try practicing the 24-hour rule. If you’re still interested in the desired item after sleeping on it, you’re less likely to splurge.
4) Automate bill payments and reduce your debt
Time flies when you’re having fun, which can make it easier to forget about your less exciting obligations like payment due dates. Indeed, the last thing you want to happen is to return to reality with a bunch of unpaid bills. Do yourself a favour: automate bill payments and savings contributions sooner rather than later.
Another good idea is to take time to think about your debt repayment strategy. If you’re worried about growing interest charges, try the avalanche method. Keep making the minimum payments on all your debts, but allocate more funds to the debt with the highest interest rate, like a credit card balance. Once the balance is paid off you can move on to your next most expensive type of debt.
How are you planning to keep track of your summer spending? Have your summer spending plans changed because of COVID-19? Join our conversation on Facebook or on Twitter #SummerSpending #FinancialWellness