After the rush and expense of the summer holidays, it’s natural to feel a bit anxious about money.
It’s easy for spending to creep up during this time, with holidays, days out, social events and treats all adding to the bill. Along with that, it’s common to save less and rely more heavily on credit cards during this busy period.
We spoke to Jennifer Crichton, associate planning director at Killik & Co, about why the end of summer is the ideal time for a financial reset, and the practical steps you can take to get your money back on track.
Make tackling any short-term high-interest debt an immediate priority.
“When looking at your finances after the summer holidays, I would recommend thinking about any short-term debt that has built up first,” advises Crichton.
She notes that lots of people put big purchases like flights on credit cards during the summer break which can lead to high-interest charges if you do not pay the balance off right away.
“Think about how to either get rid of that debt or get a plan in place to get it down as quickly as possible,” recommends Crichton.
Sort out your emergency reserve
“Once you have looked at your debt position, make sure that you’ve sorted your emergency cash reserve,” advises Crichton. “For this, we would recommend a minimum of three months of essential expenditure, if that’s possible.”
Having that emergency cash fund will help lower stress as knowing you have money saved for sudden bills prevents panic.
“When you’ve got that emergency fund as a back-up, it’s nice to know that you wouldn’t be living month to month if something did unfortunately happen to your more stable income,” says Crichton.
Looking back at your summer spending can sometimes be helpful.
“See what different areas your money has been spent on and if that aligns with what you want to achieve,” recommends Crichton.
“It might provide a little bit of encouragement to learn and find out that you could have probably saved X, Y, and Z in certain areas and could have got some of your money working harder for you.”
“Do a bit of a budget reset and take stock of where everything is going,” recommends Crichton.
“People often think of budgets as restrictive, whereas I would encourage people to think of a budget as knowing where everything is going.”
If you have never made a budget before, there are lots of apps that can help.
“Some bank accounts will show you where all your expenses are going, will help you set a budget and will help categorise all your spending,” says Crichton.
