A lot of Kiwis have struggled over the past couple of years, and as the summer season approaches, it can be a time of real financial tension. With the addition of COVID, the cost of living rising, and the wealth gap growing, a budget and a good financial framework is becoming more important and valuable.
We have previously predicted, and seen in reports, that during the summer season, borrowing and spending is at an all time high. However, after Auckland being in 3-months of lockdown, and churning over ⅓ of the country’s economy, we have a feeling that spending will be very different this summer.
What is a budget?
A budget, in its most simple terms, is the management and knowledge of your incomings vs. outgoings. This is your income (salary, wages, rental, dividends, anything that adds monetary value) less your expenses (fixed costs like rent, mortgage, bills, and variable costs, such as groceries, fuel, and entertainment).
Managing your budget means you find a way to manage your incomings vs. outgoings, and you don’t overspend each month. Even having the knowledge of what you spend each month and being aware of your spend will help you keep accountable.
Summer break and the stats.
Over the summer and holiday period, we’re expected to spend $1000 – $2000 more per person than we are at any time per year, and adults are expected to spend $300 more just socialising. To be fair, there’s a lot to think about, from kids, school holiday programmes, baby sitters, socialising with friends, vacations, New Year festivities, the list truly goes on. This extra spending isn’t often compensated with extra pay, and it has to come from somewhere!
With that in mind, we always recommend you prepare your budget as early on as possible – even as early as January.
Preparing your budget for summer.
Before you even begin the spend, assess where you’re at financially. This means looking at what you have to pay off before the end of the year, and taking into account what social events might be coming up for you and your family.
Every year, we are suddenly hit with the realisation that we’re in November and it’s time to start shopping for our friends and family. If you have young ones, or a big family, the costs really add up. We usually like to, early on in the year, see if you can put some cash aside for the silly season, especially if you are a contractor or someone who works on wages. Putting aside cash specifically for the summer when you could be less likely to get work, or even putting cash aside for presents, will help to alleviate the pressures associated with holiday gift giving.
Re-approach your spending for your family this Holiday Season.
We have been taught that Christmas and the holiday season is all about gift giving, which we love! It’s a great token of love, appreciation, and family. However, as an alternative, you could forgo the presents and gift giving, and spend money on something for the family, or donate to charity.
There are other methods too, such as a read, need, want, wear approach. This gives a total of four presents and can make for a really meaningful holiday period, rather than buying for the sake of gifts!
If we’re honest, most of us here at Money Empire love a bargain and a sale. Make a list, check it twice, and go on PriceSpy a couple of times before the sales start, just to make 100% sure you’re actually saving money (and not being told it’s a sale when it’s really the same price)!
Switch up how you vacation.
Another great option for saving spending in the summertime is doing lower-cost or free activities. While a vacation at a hotel is very appealing, especially after the long year we’ve had, another option would be doing a house swap, or going camping on cheaper campgrounds. Looking at these lower cost options for your family should hopefully provide some relief, and will still get you out of the house.
Not a vacationer, but still want to get out?
Sometimes our commitments mean we can’t always get out of the house, whether it be work, financial, or simply having the family around for days on end. We love a day road trip to a local park, beach, or seeing one of the many scenic spots that this country has to offer. Luckily, we’re never too far from a great picnic spot.
Going to a public park or beach gives us the freedom to use the facilities, often for free. Instead of forking out a couple of hundred per person, all you really need to do is BYO food, shelter, and water, and you’re good to go!
If you can, don’t get the card.
And by this, we mean try your absolute best to avoid getting that pretty plastic card in your wallet, or taking out a loan with a bank or a third-party lender. We’ve seen heaps of our friends and families rack up debt so quickly during this period, spending easily and not thinking about it until they get back into the grind and have another shocking realisation… “How am I going to pay this all back?”
Debt can really quickly impact your ability to get a loan down the line, and the added pressures of debt can add to financial pressures. Both of these can have a long-term impact on mental health!
Ultimately, budgeting and saving for summer requires a lot of financial preparation, self control, and diligence. If you can spread the spend across the year (and hide from prying eyes and hands), try your best to do that. By following some of our ideas above, we think the stress of the spend will be reduced.
Please take our thoughts and opinions not as personalised, recommended advice! As this is not a personalised financial recommendation, we recommend reaching out to one of the team to get something personal and tailored to your needs. Get in touch with us here.