How to deal with unexpected summer costs

Have fun saving money over lockdown, did you?

Sure, the distinct lack of expenditure over the past 15-16 months have been great, but things arestarting to get back to normal.With a return to normality,you’ll probably find your day-to-day spending is steadily rising to where it was before.

The next few months are set to be interesting ones from a budgeting perspective. Many rescheduled social events like weddings, stag and hen dos and other big celebrations that were postponed over the past year and a half are all getting crammed in close together. For those participating, that can rather quickly take monthly spending from next to nothing to an awful lot.

Indeed, summer is a classic time for unexpected costs to rear their head, but with this year especially likely to be a shock to the financial system, what can you do to deal with them?

Reasons your budget isn’t working

If your budget has gone from being watertight to looking shaky recently, these could be some of the reasons:

• You haven’t given it enough thought: Saving money over 2020 and beyond may have happened to you organically. By that we mean you didn’t make any budgetary decisions to generate savings, they just happened. Now that life is back to normal the associated costs come with it, so you might need to put more effort into your budget to stay in the black.
• You’re spending more than you’re earning: Again, this perhaps wasn’t a particular worry over the past year and a half with nothing to do, but that might have stopped youfrom thinking about where and how you’re spending your money. With every wedding, party or event you attend, you’ll be spending a small fortune.Those costs may well suddenly add up to more than your income on the month.
• You’re not budgeting properly for different categories: Now that a lot more recreational spending is back on the table, you may have to address your category spending and apportion more funds to having fun. That spending should come at the cost of another area, though, which is a key thing to figure out to get your budget in shape.
• You aren’t adjusting it: Summertime, and summer 2021 in particular, is always a period of higher spending. With holidays and general fun in the sun to consider, you need to account for that in your budget. Planning your finances to spend more now and save more later will help you to recover from the bigger spending months.

Building an emergency fund

Emergency funds are essential for dealing with unexpected costs, particularly if you’re getting to a point where you’re spending about as much as you earn again. Right now, you might be thinking about how next week’s stag do is going to affect your budget, but what if the boiler breaks down or a pipe suddenly bursts? Sudden, unanticipated but essential repair costs like these can send you into financial chaos if you’re not ready for them.That’s where an emergency fund can help.

You can build an emergency fundby aiming to set aside three to six months’ worth of living expenses. This might seem like a mammoth task, but if you put little bits of money aside gradually – as much as you can afford every month –you’ll build towards it quicker than you might think. Then, when a rainy (or chaotically sunny) day comes, you’ve got that all-important safety valve to keep you financially afloat.

Just remember to assess your finances and ensure you are only putting away an amount of money that will not leave you short.