What happens to your spending in the summer?
According to a recent Pollara report released by BMO, the majority of Canadians will be looking to save money over the summer months.
- 79% of Canadians will look to save more and maximize their income.
- 59% plan to create a budget
Does spending decrease over the summer?
As a father of 4 boys, I think the summer means more expenses, not less. For families, I think we tend to take family vacations during the summer school break. Summer also means more summer camps with their friends. And summer tends to be a time to get projects around the house completed which often means more spending.
That being said, my family is not necessarily representative of everyone but for 79% of Canadians to look forward to lower spending in the summer months, it seems a little optimistic to me.
Saving and debt reduction needs to be ongoing, not seasonally
To be truly effective, increased savings needs to be done automatically 12 months of the year and not just over a few months. Pay yourself first is the most effective savings concept.
The best way to save is to take advantage of workplace savings programs, especially if there is employer matching involved. If you are not fortunate enough to have a workplace saving program, then setting up an automatic monthly contribution from your bank account is the best alternative. Most people who try to save what is left over, never save anything.
Debt levels keep rising
It’s interesting to me that many studies suggest that people intend to reduce debts and spending but in reality debt levels keep rising. Is this another case of good intentions but poor execution?
Take action by making it personal
Whatever the case may be debt, saving and spending issues are personal matters. When you see aggregate statistics in studies and through the media, don’t worry too much about the average or what everyone else is doing. The only thing that matters when it comes to personal finance and debt is your personal situation.
When it comes to debt, the best thing to help you understand if you have a debt issue is to look at your past trends in managing debt. Take a look at your debt levels over the past 3 to 5 years and see if your debt levels have risen, dropped or stayed the same. If your debt levels have gone down, then you are on the right track. If you want debt to go down faster, find ways to make bigger payments towards those debts. If your debt levels have risen then you are probably spending more than you make and you need to figure out how to reverse the trend.
Once you know where you have come from over the past 3 to 5 years, make some goals and determine a proper course of action. Base these goals on where you want to be 3 to 5 years from now. Remember that looking beyond the next 3 months is important because just like saving money needs to be an ongoing habit, so does debt reduction. The same can be applied to saving and spending. Look at how much money you have saved every year for the past 3 to 5 years. Are you happy with that result? If not, what are you going to do for the next 3 to 5 years? Set your goal and get to work!