RateCity.com.au
Advertisement

How to avoid summer money traps


RateCity Staff

By RateCity Staff

3 min read

The summer months coincide with the Christmas season, tempting retail sales, school holidays and long nights made for dining out. It’s no wonder we end up spending more money than at any other time of the year.

With so many summer money traps ready to draw you into their clutches, it’s financially prudent to consider some savvy tips to avoid being broke by autumn.

Learn to budget

The key to avoiding any financial trap is to be prepared. Start by devising a 12-month budget at the start of each year and calculating how much you are likely to spend in the summer months on holidays, eating out more often and splurging at the post-Christmas sales. Make sure you minimise your spending in other months to account for the more expensive months.

“Allow for higher spending in summer in your budget and set money aside to cover it,” financial adviser Steve Crawford, director of Experience Wealth Advice, recommends.

“Some of my clients have a specific summer fund, which is a separate savings account that they prefill to use during the summer. When it runs out, they go back to normal spending levels.”

Set up your summer fund by opening a high-interest savings account and making monthly, fortnightly or weekly deposits.

Opt for less expensive activities

It’s not just overseas or interstate getaways that drain your bank account during the summer months. With warm nights beckoning, it’s easy to eat out more often or spend more time socialising in beer gardens, even if you stay at home. Crawford suggests balancing out money-zapping activities with cheaper alternatives.

“A Foxtel movie on demand costs from $3.95, whereas going to the movies can cost you as much as $50,” he says. A picnic or dinner party also cost less than hanging out at the newest hip bar.

Writing down your expenses as part of a budget helps you see what money traps you are falling into and you can adjust your spending accordingly. For young families, Crawford suggests trips to the park for informal sporting matches or bike riding, beach excursions and DVD parties.

Minimise impulse buying

At sale time, it’s tempting to buy something because it’s too good a bargain to ignore – even if it’s something you’re unlikely to use.

Crawford says the best way to minimise impulse buying is to hold off buying certain necessities – for example, that new suit you need for work or a new bed mattress – until the post-Christmas sales. That way you get your retail fix by buying (and saving money on) something you need instead of things you don’t.

Keep a lid on the air con

Feeling hot? Try to avoid turning on the air as a default position. Consider enforcing a rule to only use air conditioning on days when the temperature exceeds 30 degrees or use a fan instead. The average fan costs less than 1 cent per hour in electricity, while even the smallest sized air conditioner uses up 12 cents per hour.

Don’t beat yourself up about it

It’s not uncommon for people to experience high levels of anxiety over money at the start of a new year, according to Crawford.

“I’d hazard a guess that a lot of people who are in that situation fall into a pattern of silly season spending,” he says. “But don’t beat yourself up about it. Instead, put plans into place to stop it from happening again.”

Advertisement

Contact a Broker

A broker will compare hundreds of home loans to help find the right deal for you, at no cost.

By submitting this form, I accept Loan Market's terms and conditions, privacy policy and Collection Statement for this service.

Yes, I'd like to get email updates from RateCity

Submit your details now and a local expert will be in touch within a few business hours. They'll compare hundreds of home loans from up to 20 lenders including the big banks to find the loan that's right for you. Book your free appointment today.

Loan Market Pty LTD | Australian Credit License 390222 ABN 89 105 230 019

Compare your product with the big 4 banks, or add more products to compare
Advertisement