By Jean茅 Herman, LIT, CIRP
With spring on the way, and summer close behind, it鈥檚 natural to start dreaming of lazy lake days and family barbecues, vacations and long-weekend road trips.
And with some simple planning we鈥檒l look back on our summer with warm memories instead of mountains of debt.
Sail into SUMMER with a budget:
- (S)et specific and realistic goals
- (U)nderstand and Use credit wisely
- (M)eet your needs first, wants second
- (M)easure your progress
- (E)nvelope system
- (R)ecord your expenses
(S)et specific and realistic goals: Be specific and realistic about how much you can spend, and save. T for a few months, tallying receipts at the end of each month, by category (i.e. housing and utilities; vehicle; food; personal expenses).
Now, what will you need to save? If plans include a road trip, that means fuel, maintenance, meals, accommodation and activities. If you want $1,500 set aside for your vacation in six months, that means saving $250 per month. Is this realistic based on current spending habits?
It鈥檚 also important to build an emergency fund 鈥� before you save for anything else 鈥� to cover your obligations in case of lost income or unexpected expenses.
(U)nderstand and use credit wisely: Before using your credit card for major purchases, . Here are a few tips for using credit on your vacation:
- Notify your credit card company that you鈥檙e travelling so they don鈥檛 flag your card for abnormal purchases.
- Take advantage of additional purchase protection and travel insurance offered by some cards.
- Use points to pay for a rental car or hotel.
- Pre-pay your credit card and use it for purchases while vacationing, rather than carrying cash.
- Remember that credit costs money in interest charges. Only use credit if you can pay it in full every month.
(M)eet your needs first, wants second: Prioritize spending goals, looking at needs first 鈥� what you need to survive. After budgeting for your needs, consider what you want. By cutting back on 鈥渨ants鈥� now, you can save for those summer extras.
(M)easure your progress: After tracking spending and setting budget goals, you鈥檒l start to see spending trends. Compare actual expenditures to your budget.
A budget is a constantly changing thing. No one month will be the same as another and you need to allow for spending overages 鈥� reducing spending in one category to address overages in another. For example, exceeding May鈥檚 mobile data means a bigger June bill. You may need to adjust other June spending to balance the budget. Ideally you have savings in place to cover the unexpected.
(E)nvelope system: After tracking expenses and setting your budget, the 鈥榚nvelope system鈥� can help you stick to your budget. Put your cash in separate envelopes labelled for each expense category. If you鈥檙e tempted to use money from another envelope, ask if you can accept the consequences. If you take the money, leave a note 鈥� several notes mean it鈥檚 time to revise your budget!
(R)ecord your expenses: Record every expenditure 鈥� before you set a budget and after. You can鈥檛 properly forecast spending without reviewing your history. Sort expenses into categories and total the categories every week. Compare them to your budgeted amount and adjust spending if required. There are , including a notebook or chequebook, calendar, computer spreadsheet or APP.
Now you should be all set to sail into SUMMER!
If you do find expenses are higher than your income and you鈥檙e struggling with monthly payments, don鈥檛 suffer alone. Schedule a free, confidential consultation with to learn your options for a permanent fresh and a debt-free future.
Based out of 琉璃神社, Jean茅 Herman, is a Licensed Insolvency Trustee and Vice President at Contact Jean茅 toll-free at 310-DEBT or 877-898-2580 for a free, no obligation, confidential consultation to find a Life-Changing Debt Solution that fits your unique situation.
