Use Cash Budgeting to Conserve Cash in Summer
Use Cash Budgeting to Conserve Cash in Summer Apart from the holiday season, summer is the most expensive time of the year. You have rising electrical costs from cooling your home, your gas usage shoots up from using the car's AC, and the kids (if you have kids) all want to go on summer vacation. In many ways, summer is the worst enemy of a healthy bank account. How can you make sure you don't overspend and end up underfunded this summer? Use the cash budgeting method. ==> Determine How Much You Want to Spend This Summer Decide how much money you want to spend this summer, on a monthly basis. One way to do this is to look back on the previous few months. What were your expenses for the last three months? In summer, it might be unreasonable to try and keep your expenses exactly the same. However, you could give yourself a cap of no more than 10% more than you spent in non-summer months. Pick a solid number that you'd like to stick to. ==> Divide Any Major Expenses among the Summer Months Let's say you're sending your kids to summer camp. You have two kids and it costs $500 apiece, for a total of $1,000. Instead of counting that expense all in one go, divide it among the summer months. If you're counting June, July and August as summer, you'd add $333 to each of those months' expenses. By adding the expense to three months rather than one, you make it a lot easier to offset the costs by saving money in other areas. ==> Take Out Your Weekly Allowance in Cash Divide your monthly allowance by four and use that as your weekly allowance. At the beginning of each week, head over to the ATM and take out that amount of money. When you get home, lock your debit and credit cards in a drawer. For the rest of the week, you'll use only cash to make purchases. This kind of mentality forces you to save money. Every day at the end of the day, you'll see exactly how much cash you have left. You won't be able to overspend, because the money simply won't be there. Make it so that in order to open the drawer with the credit cards, you need both your own and your spouse's permission. The drawer shouldn't be opened unless it's an emergency. This cash-based approach will help you make the sacrifices necessary to keep a budget in check. Sometimes saying "no" to spending money can be really tough. Seeing a dwindling, finite pile of cash can really help you make those tough decisions. Try out this system for at least one month before deciding whether or not it helps.