We all look forward to our summer holidays from the time the last one has finished. I remember being so excited by the prospect of spending my summer in a caravan at Weymouth Sands. It was only a few years later the destination was Spain and off to roast on the beach. Today it is possible to spend your summer in ways that were not imaginable whilst in our caravan at Weymouth. The caravan cost about fifty pounds for the week, trips to Spain a thousand. Today it is possible to spend thousands on our summers.
Budget
With everyday costs constantly rising it is important that we budget for summer. Do you work from a budget? Every year I prepare a simple spreadsheet to work out my Finances for the year. Starting with my household monthly income I then subtract from this what I call fixed expenses such as a mortgage, council tax. I then estimate variable costs such as shopping Christmas and birthday gifts. This shows what spare money I have and when it is available. If I have debt in the end, I need to find ways of increasing my income and reducing my variable costs.
Debt
It is easy to simply use a credit card to pay for your summer and that is fine if you work it into your budget and can pay this debt of quickly. Unfortunately, people build up higher levels of long-term debt in this expensive way and become trapped trying to pay it off for years. This has a negative effect on a budget.
Affordability
It would be easier to pay what we can afford for our summers? Unfortunately, our expectations have grown and with it the cost. To make our summers more affordable there are things that we can consider.
- Shop around.
- Book early and pay over a period.
- Save for a special summer every two years.
- Lower our expectations.
The Long-Term View
When we prepare our budgets, we normally consider a short span of time. Try extending your budget to ten years and see what the result is. What about at retirement, are we going to have enough money to live on and still be able to enjoy our summers. When young and just starting our work life is a private pension a consideration? For many, the answer is no, but this is the perfect time for starting on that long-term budget and giving a small amount of our income to the future.
How Much Money do we need when we Retire?
According to Which in a 2018 survey retired households spent an average of £26,000 per year to cover basic expenditure and the odd European holiday. If you are looking for the odd luxury holiday and a new car every five years you will need to have an income of £39,000 per year. Surely that is not a problem with qualifying for a state pension. Unfortunately, a state pension provides the average couple with £15,375 a year. I can smell the coffee already.
