Guest blog: Don’t go into debt for summer fun

It may still be a bit cold where you live, but spring is here. I like to use this time to get my finances in order and plan for the year ahead — especially for summer holidays. While there are some money matters that will take you by surprise, like accidents or injuries, you can certainly plan for holidays and other events that come back every year.

Here’s how you can get ready to fully enjoy the warmer season without affecting your budget.

1. Start a holiday savings plan

If you can’t always pay in full, the last thing you want is put your holidays on credit. You’ll end up paying a lot of interest for something that will be long behind you. So try to figure out right now how much you will need for your holiday. For example:

  • Accommodations: $500
  • Flights/car rental/gas money/bus pass: $200
  • Food: $300
  • Activities: $200

Total: $1,200.

To have that kind of cash saved 12 weeks from now, you need to set aside $100 a week. Open a high-yield savings account and set up an automatic transfer to send the money every time you get paid.

Also look for ways to reduce your original budget as much as possible. For example, if you apply for a travel rewards credit card, you can earn miles and free hotel nights, or some cash back when you book your holidays.

Renting a house instead of a hotel if you’re traveling with the whole family will save you a bunch of money as you can cook breakfast and dinner instead of eating out. Also try to limit paying for visits to must-see attractions, and do a bunch of free activities as well. For $80, you can get a National Parks annual pass, and visit as many parks as you like. This is a great way to spend a week exploring on a budget.

If you are more into city holidays, research free events, and if museums are free once a week, plan your visits on that day.

2. Be smart with your tax refund

This is the time for tax refunds. The average refund is $2,800, so that is some serious money — money you worked hard for and should be using to save or invest.

If you are carrying a credit card balance, use your tax refund to lower your balance. You should also look into 0 percent balance transfer deals in order to stop paying interest on your debt for the next 12 months.

If you don’t have debt, this is the perfect time to contribute to your Roth IRA or 401(k). If your company offers to match your 401(k) contributions, don’t pass on the free money.

Finally, part of your refund can be used to kick-start your holiday savings plan.

Once again, a little planning now will allow you to enjoy summer without worrying about your debt or about picking up extra shifts.

3. Look for fun, frugal activities

The longer days are the perfect excuse to get outside for some fresh air – but they can also tempt you to spend more money. Time to start building some different habits. Here are a few ideas:

  • Walk or run around a different neighborhood
  • Have a picnic in a park
  • Visit a state park or a National Park close to home
  • Have your friends over for a potluck BBQ
  • Organize a game night
  • Get a cheap bike and go cycling
  • Cancel your gym membership and use the city as your gym
  • Organize a meetup with neighbors around a shared hobby
  • Look up your town or the nearby college’s cultural calendar for free events
  • Go to garage sales and look for old furniture to start a DIY project

Try not to replace your winter spending with something else. For example, in winter, you might be tempted to meet your friends in a cozy bar and have cocktails by the fireplace. Instead, meet outside and go for a hike. Instead of sitting down for a hearty winter dish at a restaurant, bring a sandwich and go to the beach. It takes a little creativity to re-wire your brain, but you don’t need to charge your card to have fun.

Author bio

This is a guest post from Pauline Paquin of InvestmentZen.com. Pauline is a personal finance expert who left the 9-to-5 eight years ago, to live life on her own terms. She is passionate about empowering people financially and helping them make smart money decisions.

 
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