How to Budget For Your Summer Holiday

Summer budgeting used to throw me off every single year. Every May, I'd tell myself, this year, I'll be responsible. And then by August, I'd have derailed my long-term goals. Until I found a way to plan my finances for the summer that let me make the most of the sunny months while still meeting my bigger life goals. And so in this video, I'm sharing a system that actually works and we're keeping it super simple with three steps. Prepare, adjust, and then redirect. By the way, if you're new here, I'm Nisha. I'm a qualified accountant and a former investment banker. And on this channel, we discuss all things, personal finance and self-development. Let's dive in. Phase one, prepare. And May is the perfect time to do it. Why the month of May? Because it's early enough to plan properly, but close enough to summer that you're actually feeling motivated to do something about it. So start with a personal finance check-in. This is important because without knowing your true starting point, any budget that you make from here on is just wishful thinking. So the question you need to answer is firstly, how much have I already saved? And how much of that amount am I okay with spending this summer? And secondly, looking at the next few months, how much of my take-home pay can realistically go towards the summer's plans? Once you've got those two questions answered, now you have a ballpark figure of how much you have available to spend over the coming months. The next step is to estimate how much you will actually spend this summer. And the issue here is it's so easy to underestimate how much summer really costs and how much you will spend, because naturally we have a tendency to ignore all the last-minute stuff that pops up that's so easy to say yes to. Festivals, last-minute brunches, birthday gifts, those outfit panic buys that seem totally necessary at the time. The point is those spontaneous last-minute moments add up. So the best way to do this, the best way to estimate how much you're actually going to spend this summer is to look at how much you spent last summer. Your past spending is one of the best predictors of your future spending. So go through your transactions from last June to August and get a rough total of how much you spent. Now step three, you want to map out your ideal summer. Think about what memories do you want to create this summer? What do you want to attend as an absolute must this summer? What you can do is create an ideal month for the next couple of months. What do you plan on doing? What does your ideal month look like? What vacations are you dreaming of? Are you looking to have a big getaway or do you prefer small weekend getaways? Add in those last-minute dinners that might pop up, those takeaways and then put a price tag on everything. So if you've got a holiday coming up, I don't mean just factoring in the flights and the hotels, but also how much do you think you're going to spend on a daily basis? What activities do you plan on doing? How much do they roughly cost? The outfits that you might need to buy ahead of the trip. When you looked at your spending for last summer, you will have transactions and things that pop up that you now know you need to include for your ideal months this summer. And once you have your summer wishlist priced out and planned out, compare it to the actual budget you have available. There may be a gap and that is where you prioritize. Break your plans into three tiers, starting with your absolute must-haves. These are the non-negotiables. These are the experience that years from now, you'll look back on and think, I'm so glad I made that happen. For me, for this summer, it's my cousin's wedding coming up in Portugal. That's getting funded first, no question. And then it's the middle tier. And these are things that would be nice, but not heartbreaking if they don't happen. And then you have your low priority. Once you've got your list ranked, start allocating the budget that you have towards those priorities. So if you've got 800 in total budgeted, and your top tier trip is in July, you already know to go light on the impulse plans and the low priority stuff in June. And so when something tempting comes up last minute, you'll know instantly whether it's worth shifting things on or letting it go. Because once you prioritize what you want to do this summer, once you've allocated your spending towards that priority, you can then spend with intention. And by the way, if you're looking to save a bit more, so you can actually completely enjoy the summer without stressing every time you swipe your card or whether you're going to run out of your budget, I'm running a completely free five-day savings challenge starting on Monday. Each day, you'll get a short email from me with a super practical money tip, plus one action step to help you fast track your savings. It's light, it's super doable, and it's totally free to join. I'll leave the link in the description if you want to check it out. Now we're moving on to phase two, which is adjust. And this happens between June to August. So summer is now here, and this is where a lot of people fall off. They plan in May, but once the sun's out, the budget just flies out the window. So this phase is all about staying flexible without losing control. So first, check in with your budget weekly, if you can, mid-month at the very least. During the summer months, you want to check in with your budget a bit more than what you'd usually do. And look at what you've spent so far and ask yourself, can I keep going at this pace or do I need to slow it down? So if you've already burned through half your summer fund, and it's only July the 5th, and you've got big priorities coming up, think about how you can get more creative with your budget in a way that lets you enjoy 90% of the fun at 50% of the cost. So things like making sure you're using credit cards that earn points or cashback on travel, booking in advance always, or continuing with social plans, but in a way that's more budget friendly. It's about finding smarter ways to say yes to the plans that matter. Now moving on to phase three, and this is the reflect and redirect phase. So summer's winding down and whether you stayed on budget or you let things run a little wild, which happens to the best of us, now it's the perfect opportunity to regroup and realign with your longer term financial goals. So if you went over budget, you want to know where did that extra money go? Was it worth it? What surprised you? And write it down now whilst it's fresh. Whilst you're reviewing, write it down, because if you wait until next year, you'll forget about how that spending made you feel. You won't remember how that branch actually felt when the bill hit, or whether that concept that you booked last minute was really worth the additional $80. Without that reflection, it's then easy to repeat the same patterns next summer and the summer after. If the summer pushed your finances off track a bit, that's okay. This is where we zoom out and we look at your bigger picture. I always recommend viewing your money through a 12-month lens, thinking of it in terms of your yearly forecast, not just a single season. When you think of your finances as a 12-month forecast, this approach gives you flexibility whilst maintaining your overall financial health. So look at your total income for the year, look at your total expenses, and then ask, what's my target spending for the year overall? And then once you have this broader view, you can manage your financial downs and flows naturally. You might overspend in the summer months and then underspend in other months. It's about balancing this over time. And that's normal. The goal is to make sure that when you zoom out, things still balance out. I go deeper into this specific step and how to do this with real examples in this video right here. It's about how to plan for income surpluses and deficits across the year and how to look at your finances from a 12-month lens. If summer threw you off or you had to dip into your emergency fund, just redirect your spending for the rest of the year now. Start with small adjustments, cut back on things you won't miss, skip a few non-essentials this month, funnel those savings right back into your emergency fund. Because by making these targeted adjustments straight away in September, you can recover from your summer splurges while still maintaining your longer-term financial goals and your 12-month plan. Okay, so now we have the three steps. Let's do a quick rundown of the actual budgeting systems you can use. We all manage our money differently, so here's a quick rundown of the most popular because what works for one person might not work for another. First is the 50-30-20 rule. This is a hugely popular budgeting method. Essentially, it says 50% of your take-home pay covers your fundamental needs like your rent, your bills, your food, the stuff you absolutely must pay for. 30% goes towards your fun. These are things like your wants, entertainment, dining out, travel, and 20% towards your future use, so savings, investments, emergency fund, anything else that sets you up for the long-term. The 50-30-20 rule, it's easy to follow and it helps you avoid last-minute money stress and it works according to your specific income. So whether you're planning a quick weekend trip or a bucket list holiday, this budget adjusts to fit your situation. But if you're looking to save fast, you have a holiday right around the corner. Putting aside just 20% each month might not be enough unless you tweak your spending. And for freelancers, it might be a bit trickier to do because it assumes a consistent income. But it does give you a very clear guideline on how to manage your finances without micromanaging every single dollar that you spend. So it's perfect for people who want structure but hate tracking every coffee purchase. Then you have the zero-based budgeting. This is where you give every single dollar that you have a specific job to do. So at the start of the month, allocate every bit of your income to a specific expense, saving goals, debt repayments, until your total income matches your total spending or your total expenses. So there's no money left without a purpose. Prioritize your fundamental spending and then set aside savings for your holiday upfront. Then you adjust as you go. You cut back on the non-essential stuff to free up more money for your trip. The upside of this budgeting method is that it stops wasteful spending because you think twice before buying unnecessary things. The downside is that it takes a lot more time and effort than the percentage-based spending that we spoke about just a moment ago because you have to track every single penny. Then you have the envelope method. This is a really simple, old-school cash system. And as many people still use it today, you grab an envelope and for every spending category, you label it. So if it's a holiday fund, it will be activity spending, dining out, and you put the exact amount of cash you've budgeted into each envelope. And when an envelope is empty, that's it. There's no more spending in that category until next month. So carrying around cash isn't always practical. So most people now use budgeting apps that create digital envelopes within one account. It's the same idea, it's just safer and more secure. This is perfect for someone who loses track of spending easily or if you need really strong visual cues to stick to your plan. So those are the top three budgeting methods that you could try out during the summer months. The most important thing is just picking a method that fits your life and that you'll actually stick with. For me, I use a mix of the 50-30-20 rule with some zero-based budgeting thrown in for my summer planning. The best budget isn't by any means the most sophisticated one. It's just the one that you will actually follow. So I hope you found this useful and you have a great few summer months ahead. If it was helpful, share it with someone who might be planning this summer right now too. And once again, if you want to join the 5-Day Savings Challenge starting this Monday, it's completely free. You can check out the details in the link in the description so you can start fast-tracking some of your savings. Thank you for watching.