Summer months, like Christmas, can often be a time of year when household expenses suddenly increase.
People are expected to spend more than £ 700 typically on fun this summer, according to a recent Virgin Money poll.
While the pandemic could mean fewer people are going on expensive overseas vacations this year, there will still be costs to factor in – such as vacations, children’s entertainment, catch-ups, barbecues and perhaps be new summer outfits.
But what if your budget is tight or you’re worried about having to shell out extra cash? To help relieve stress on finances, here are some tips from Alun Williams, Shawbrook Bank Savings Business Manager…
1. Be realistic and allow for leeway in your budget.
Creating a reasonable budget for yourself is one of the most effective ways to accumulate savings over time. The key to budgeting is understanding what your habits are and how you spend.
You may find that it is impossible to stick to trying to cut social activities or buy something new, so make sure you set a budget that you know you won’t be tempted to do. move away.
And if necessary, give yourself a “margin budget” that will allow you to spend a little more than what you would ideally like. That way, if something must come up, you won’t feel too guilty about enjoying it.
You will discover over time how successful a budget can be in growing your existing savings. And this is especially important during the summer when, if they are lucky, people have often planned for more opportunities to soak up the sun.
2. Pay yourself first
Naturally, many of us start paying our bills straight away when we receive a payslip and then spend the rest without giving it much thought. If you find that your disposable income is burning a hole in your pocket, try to prioritize your own money each month when you get paid.
If you can, you can consider starting with the “80/20 rule” – putting 20% of your income directly into a savings product. Over time, you may find that you can increase this amount, contributing 25% or even 30% of your savings.
Remember, the more you can save on an account, the more you will earn on it.
3. Avoid automatic renewals
Many of us believe that staying loyal to suppliers saves money in the long run – in fact, it can be quite the opposite. We are often drawn to introductory offers, only to be disappointed later.
According to GoCompare, nearly 6.7 million drivers have authorized auto renewals for their auto insurance in 2020. But by using price comparison websites, people can potentially save significant amounts of money.
To tackle the “loyalty penalty”, the Financial Conduct Authority (FCA) will introduce a radical price change in the auto and home insurance markets next year.
Under the new rules, existing customers will receive the same price as new customers. The pricing and automatic renewal rules come into effect on January 1, 2022.
It is also worth shopping around for household bills in general. There are many tools to help you save money without wasting your time. You can also use free tools to automatically switch to a cheaper deal.
4. Check your subscriptions
The lockdown left many of us with money and free time, resulting in a slew of new subscriptions to keep us busy. But now might be a good time to review what you signed up for and cancel anything you don’t need.
There may also be habits that you developed during the lockdown that you can continue with. For example, you might find that you don’t need a gym membership while the sun is shining and you can jog outside instead.
5. Use online apps and tools to your advantage
There are hundreds of apps that could help you save a little here and there. Some may round your payments to the nearest British pound, putting all savings in a separate account. Once you have accumulated savings, then you can consider investing them wisely so that your money is put to the best possible use.
There are also extensions you can add to your browser that will automatically search for coupons and discount codes for the website you are on, saving you extra money.
Beyond using these helpful tools, be sure to put extra money in an account when you can and watch your savings grow.
And something else for families …
HM Revenue and Customs (HMRC) is encouraging working families to find out if they can use tax-free child care to help pay for their child care expenses during the summer. Top-up can be used to help pay for licensed vacation clubs, childminders, or sports activities. It is available for children up to 11 years old or 17 years old if the child has a disability. For more information, see www.gov.uk/tax-free-childcare.