Expert advice on how to plan your summer budget

As the days grow longer, many of us might already be imagining a summer calendar packed with holidays, festivals and spontaneous getaways.

But alongside the excitement, the costs can quickly add up. Travel, childcare during the school holidays, eating out, weddings and other seasonal expenses can all push spending beyond what we originally planned.

“Spending off the cuff and doing things without a clear plan in place can get you into the territory of overspending or taking out debt, which ultimately leads to a financial hangover,” says Matt Beck, associate director and chartered financial planner at Smith & Pinching.

“In addition, from a mental perspective, you’re always going to be that little bit more anxious if you don’t know whether you can afford your plans or not, and that can make the summer months much less enjoyable.

“Having a clear plan in place, understanding what your budget is, what your monthly surplus is and what you need to save to achieve your summer goals and lifestyle is key.”

So when should you start planning? According to Beck, the start of the year “is always a great opportunity to outline your financial goals”. If you haven’t already started, he adds: “April (start of a new tax year) is also a good time as lots of people have pay adjustments that time of year.

“But, ultimately, it does depend on how much you’re looking to save for whatever your summer plans are. If you are wanting to book a particularly big holiday, for example, that might need to be booked and saved up for at least a year in advance. So, it really comes down to how much you’re wanting to spend and how much you’ve got in terms of surplus income to put towards that.”

Here are some key steps to help you create a summer budget…

Address any lingering debt

“Before you start thinking about what you want to spend money on in the summer, outline any outstanding debts that you have and make a plan of how you are going to pay them off,” advises Beck.

“There’s no point planning towards a future goal if you’re still paying for something that you’ve already done.”

List fixed costs

“Doing a household budget plan is a really useful exercise,” says Beck. “Go through your monthly expenses and see how much you are actually spending on an average month.

“This will gives you a realistic baseline of how much you spend each month and from there you can then start to understand how much you’ve got as a surplus in terms of your monthly income to put towards summer goals.”

Write down your goals and limits

“Everyone has different levels of income and capacity to spend, but even high earners can run into trouble if they are trying to follow an expensive lifestyle but haven’t planned accordingly,” says Beck. “It’s important to think about what you want your holiday to look like and to be really clear about what the costs involved are.”

He says writing down your goals can be really useful starting place, so you have a clear idea of what you are trying to achieve.

“You can even stick these goals up on the fridge so that you are reminded of them on a regular basis.”

Put summer money into a separate pot

“I think it’s a really good idea to have different buckets of money within a financial plan, because if you keep all of your money in your current account, you’re more likely to dip into it on a regular basis,” says Beck.

“If you can have a separate pot or account for summer money, that perhaps isn’t even on an app on your phone, you are psychologically less likely to even think about it or dip into it.”

Automate your summer savings

“I would recommend automating your savings and investments to come out as soon as you get paid,” advises Beck. “This can be a great way to help you stick to your goals without having to think about it.”

Factor in extra costs 

“It’s very easy to forget all the expenses involved in a holiday,” says Beck.”For example, people often start online with booking the flights and the hotel, then might have to think about how to get to the airport, possible parking costs, travel insurance, spending money when you get there etc.

“Therefore, it’s important to do your homework so that you have an understanding of the full cost of the holiday.”