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Summer budgeting used to throw me off
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every single year. Every May, I'd tell
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myself, "This year, I'll be
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responsible." And then by August, I'd
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have derailed my long-term goals until I
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found a way to plan my finances for the
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summer that let me make the most of the
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sunny months while still meeting my
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bigger life goals. And so, in this
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video, I'm sharing a system that
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actually works. And we're keeping it
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super simple with three steps: prepare,
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adjust, and then redirect. By the way,
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if you're new here, I'm Nisha. I'm a
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qualified accountant and a former
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investment banker. And on this channel,
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we discuss all things personal finance
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and self-development. Let's dive in.
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Phase one, prepare. And May is the
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perfect time to do it. Why the month of
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May? Because it's early enough to plan
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properly, but close enough to summer
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that you're actually feeling motivated
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to do something about it. So, start with
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a personal finance check-in. This is
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important because without knowing your
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true starting point, any budget that you
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make from here on is just wishful
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thinking. So the question you need to
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answer is firstly how much have I
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already saved and how much of that
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amount am I okay with spending this
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summer and secondly looking at the next
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few months how much of my take-home pay
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can realistically go towards the
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summer's plans. Once you've got those
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two questions answered now you have a
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ballpark figure of how much you have
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available to spend over the coming
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months. The next step is to estimate how
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much you will actually spend this
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summer. And the issue here is it's so
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easy to underestimate how much summer
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really costs and how much you will spend
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because naturally we have a tendency to
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ignore all the last minute stuff that
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pops up that's so easy to say yes to
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festivals, last minute brunches,
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birthday gifts, those outfit panic buys
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that seem totally necessary at the time.
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The point is those spontaneous last
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minute moments add up. So, the best way
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to do this, the best way to estimate how
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much you're actually going to spend this
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summer is to look at how much you spent
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last summer. Your past spending is one
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of the best predictors of your future
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spending. So, go through your
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transactions from last June to August
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and get a rough total of how much you
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spent. Now, step three, you want to map
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out your ideal summer. Think about what
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memories do you want to create this
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summer? What do you want to attend as an
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absolute must this summer? What you can
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do is create an ideal month for the next
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couple of months. What do you plan on
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doing? What does your ideal month look
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like? What vacations are you dreaming
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of? Are you looking to have a big
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getaway or do you prefer small weekend
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getaways? Add in those last minute
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dinners that might pop up, those
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takeaways, and then put a price tag on
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everything. So, if you've got a holiday
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coming up, I don't mean just factoring
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in the flights and the hotels, but also
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how much do you think you're going to
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spend on a daily basis? What activities
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do you plan on doing? How much do they
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roughly cost? The outfits that you might
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need to buy ahead of the trip. When you
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looked at your spending for last summer,
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you will have transactions and things
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that pop up that you now know you need
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to include for your ideal months this
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summer. And once you have your summer
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wish list priced out and planned out,
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compare it to the actual budget you have
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available. There may be a gap and that
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is where you prioritize. Break your
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plans into three tiers, starting with
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your absolute must-haves. These are the
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non-negotiables. These are the
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experience that years from now you'll
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look back on and think I'm so glad I
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made that happen. For me, for this
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summer, it's my cousin's wedding coming
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up in Portugal. That's getting funded
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first. No question. And then it's the
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middle tier. And these are things that
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would be nice but not heartbreaking if
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they don't happen. And then you have
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your low priority. Once you've got your
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list ranked, start allocating the budget
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that you have towards those priorities.
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So, if you've got 800 in total budgeted
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and your top tier trip is in July, you
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already know to go light on the impulse
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plans and the low priority stuff in
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June. And so, when something tempting
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comes up last minute, you'll know
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instantly whether it's worth shifting
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things on or letting it go. Because once
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you prioritize what you want to do this
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summer, once you've allocated your
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spending towards that priority, you can
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then spend with intention. And by the
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way, if you're looking to save a bit
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more so you can actually completely
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enjoy the summer without stressing every
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time you swipe your card or whether
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you're going to run out of your budget,
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I'm running a completely free 5day
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savings challenge starting on Monday.
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Each day, you'll get a short email from
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me with a super practical money tip plus
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one action step to help you fast track
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your savings. It's light, it's super
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doable, and it's totally free to join.
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I'll leave the link in the description
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if you want to check it out. Now, we're
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moving on to phase two, which is adjust.
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And this happens between June to August.
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So summer is now here and this is where
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a lot of people fall off. They plan in
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May, but once the sun's out, the budget
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just flies out the window. So this phase
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is all about staying flexible without
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losing control. So first check in with
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your budget weekly if you can, midmon at
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the very least. During the summer
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months, you want to check in with your
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budget a bit more than what you'd
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usually do and look at what you've spent
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so far and ask yourself, can I keep
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going at this pace or do I need to slow
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it down? So, if you've already burned
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through half your summer fund and it's
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only July the 5th and you've got big
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priorities coming up, think about how
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you can get more creative with your
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budget in a way that lets you enjoy 90%
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of the fund at 50% of the cost. So,
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things like making sure you're using
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credit cards that earn points or cash
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back on travel, booking in advance
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always, or continuing with social plans
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but in a way that's more budget
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friendly. It's about finding smarter
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ways to say yes to the plans that
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matter. Now, we're moving on to phase
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three, and this is the reflect and
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redirect phase. So, summer's winding
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down, and whether you stayed on budget
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or you let things run a little wild,
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which happens to the best of us, now
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it's a perfect opportunity to regroup
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and realign with your longer term
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financial goals. So, if you went over
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budget, you want to know where did that
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extra money go? Was it worth it? What
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surprised you? And write it down now
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whilst it's fresh. Whilst you're
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reviewing, write it down. Because if you
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wait until next year, you'll forget
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about how that spending made you feel.
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You won't remember how that branch
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actually felt when the bill hit or
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whether that concert that you booked
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last minute was really worth the
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additional weighty dollars. Without that
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reflection, it's then easy to repeat the
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same patterns next summer and the summer
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after. If the summer push your finances
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off track a bit, that's okay. This is
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where we zoom out and we look at your
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bigger picture. I always recommend
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viewing your money through a 12-month
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lens. Thinking of it in terms of your
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yearly forecast, not just a single
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season. When you think of your finance
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as a 12-month forecast, this approach
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gives you flexibility whilst maintaining
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your overall financial health. So, look
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at your total income for the year. Look
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at your total expenses and then ask
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what's my target spending for the year
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overall. And then once you have this
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broader view, you can manage your
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financial downs and flows. Naturally,
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you might overspend in the summer months
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and then underspend in other months.
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It's about balancing this over time, and
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that's normal. The goal is to make sure
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that when you zoom out, things still
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balance out. I go deeper into this
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specific step and how to do this with
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real examples in this video right here.
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It's about how to plan for income
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surpluses and deficits across the year
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and how to look at your finances from a
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12 month lens. If summer threw you off
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or you had to dip into your emergency
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fund, just redirect your spending for
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the rest of the year. Now, start with
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small adjustments. Cut back on things
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you won't miss. Skip a few
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non-essentials this month. Funnel those
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savings right back into your emergency
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fund. Because by making these targeted
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adjustments straight away in September,
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you can recover from your summer
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splurges while still maintaining your
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longerterm financial goals and your
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12-month plan. Okay, so now we have the
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three steps. Let's do a quick rundown of
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the actual budgeting systems you can
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use. We all manage our money
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differently. So, here's a quick rundown
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of the most popular because what works
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for one person might not work for
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another. First is the 50 3020 rule. This
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is a hugely popular budgeting method.
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Essentially, it says 50% of your take
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home pay covers your fundamental needs
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like your rent, your bills, your food,
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the stuff you absolutely must pay for.
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30% goes towards your fun. These are
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things like your wants, entertainment,
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dining out, travel, and 20% towards your
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future use. So, savings, investments,
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emergency fund, anything else that sets
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you up for the long term. The 503020
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rule, it's easy to follow, and it helps
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you avoid lastminute money stress. And
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it works according to your specific
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income. So, whether you're planning a
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quick weekend trip or a bucket list
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holiday, this budget adjusts to fit your
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situation. But if you're looking to save
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fast, you have a holiday right around
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the corner. Putting aside just 20% each
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month might not be enough unless you
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tweak your spending. And for
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freelancers, it might be a bit trickier
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to do because it assumes a consistent
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income. But it does give you a very
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clear guideline on how to manage your
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finances without micromanaging every
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single dollar that you spend. So it's
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perfect for people who want structure
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but hate tracking every coffee purchase.
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Then you have the zerobased budgeting.
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This is where you give every single
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dollar that you have a specific job to
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do. So, at the start of the month,
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allocate every bit of your income to a
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specific expense, saving goals, debt
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repayments, until your total income
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matches your total spending or your
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total expenses. So, there's no money
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left without a purpose. Prioritize your
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fundamental spending and then set aside
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savings for your holiday upfront. Then,
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you adjust as you go. You cut back on
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the non-essential stuff to free up more
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money for your trip. The upside of this
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budgeting method is that it stops
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wasteful spending because you think
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twice before buying unnecessary things.
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The downside is that it takes a lot more
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time and effort than the percentagebased
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spending that we spoke about just a
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moment ago because you have to track
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every single penny. Then you have the
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envelope method. This is a really simple
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old school cash system and as many
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people still use it today. You grab an
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envelope and for every spending
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category, you label it. So if it's a
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holiday fund, it'll be activity
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spending, dining out, and you put the
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exact amount of cash you've budgeted
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into each envelope. And when an envelope
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is empty, that's it. There's no more
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spending in that category until next
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month. So carrying around cash isn't
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always practical. So most people now use
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budgeting apps that create digital
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envelopes within one account. It's the
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same idea. It's just safer and more
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secure. This is perfect for someone who
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loses track of spending easily or if you
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need really strong visual cues to stick
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to your plan. So, those are the top
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three budgeting methods that you could
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try out during the summer months. The
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most important thing is just picking a
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method that fits your life and that
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you'll actually stick with. For me, I
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use a mix of the 50 3020 rule with some
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zerobased budgeting thrown in for my
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summer planning. The best budget isn't
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at by any means the most sophisticated
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one. It's just the one that you will
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actually follow. So, I hope you found
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this useful and you have a great few
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summer months ahead. If it was helpful,
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share it with someone who might be
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planning their summer right now, too.
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And once again, if you want to join the
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5day savings challenge starting this
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Monday, it's completely free. You can
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check out the details in the link in the
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description so you can start
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fasttracking some of your savings. Thank
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you for watching.
