This summer, I have plans to attend five graduations, tickets to two concerts, a vacation out of state booked, and a friend’s wedding. For many, summer is when activities tend to increase. That may be caused by the warmer weather, the experiences only available for a few months, or students being on summer break. Regardless, people tend to do more throughout the summer months. The excitement is real – but so are the expenses. It is important to be aware of your spending so you do not impact your long-term planning.
Spending on nonessentials is not inherently negative if done with thought and structure. Shared experiences cost money, but they also act as a foundation to build community and make connections with people that you may not regularly interact with. It is when spending outpaces saving that it can affect your planning negatively. There are internal and external factors that cause people to spend more. For me, the fear of missing out has caused me to sign up for events that I may not have otherwise. It is important to be aware of what is driving your spending for certain expenses and whether you would make the same decision if that driver did not exist.
Saving is often an important component of a long-term financial plan, but it has to be done purposefully. At the end of any summer come the credit card statements and bills associated with the events. When these are paired with one’s everyday living expenses, they can really add up. It’s important to have a savings plan so the experiences that you love don’t negatively impact your short or long-term goals. Even small decisions, such as choosing to drive instead of fly or gifting a less expensive item on a wedding registry can help one ensure that they don’t have to dip into their emergency fund.
The hardest thing to do is to hold oneself accountable. It is extremely simple to make a decision in the moment that does not reflect your original plan. So, what are some ways to counter this? One is to create a summer budget and adhere to it. It doesn’t need to be detailed to every exact expense, but it should capture how much you can afford to spend while still saving towards your specific goals. Another option is to set up automated savings. If funds are pulled out of your checking around the time you receive your paycheck, it is much easier to stick to a savings schedule while allowing you the freedom to decide how to spend the remaining cash. Finally, you can determine what experiences you can happily go without. For instance, I was invited by a friend to go to a concert for a band that I don’t listen to. If I had said yes, I probably would have ended up spending more than expected. Between a ticket, transportation or parking, and food and drink, the final figure could have been much more than I budgeted for. Instead, we have plans to meet and catch up the next day.
Summer is a more expensive time of year, and it can be stressful to watch the costs accumulate. There are multiple ways to combat this stress, but they require discipline and thoughtfulness. Thoughtful planning may help you enjoy experiences while staying aligned with your financial goals. Planning well and proactively can allow you the ability to be fully present in every moment with the people and community that surround you.
RTD Financial Advisors, Inc. (“RTD”) is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This material is provided for informational and educational purposes only and is intended for a broad audience. It should not be construed as individualized investment, tax, legal, or accounting advice, or as an offer to buy or sell any securities or to adopt any investment strategy. Investing involves risk, including the potential loss of principal. Individuals should consult with their financial, tax, or legal professionals regarding their specific circumstances.