Summer is a time for relaxation and creating memories, but let's be honest, it can also be a strain on your wallet. Between travel, outings, and treating loved ones, it's easy to overspend and find yourself relying on credit cards. Here's the thing: credit cards are useful tools, but using them for everyday expenses can lead to debt – which can snowball quickly.
There are plenty of ways to enjoy a fantastic summer without overspending. The thought of budgeting often puts us off, but it simply means planning your spending and sticking to a realistic limit. It doesn't have to be complicated – a pen and paper will do the trick. With that in mind, let’s get started:
Track your income:
Know how much money you earn each month. This includes your salary, any side hustles, and any benefits you receive.
List your expenses:
Write down everything you spend money on, from your mortgage/rent and utilities to food shops, transportation, and entertainment. If you’re partial to a coffee during your morning commute or the school run – include that too.
Categorise your expenses:
Once you have your list, categorise them as essential (mortgage/rent, food, utilities), non-essential (entertainment, dining out), and debt repayments.
Calculate your disposable income:
Subtract your total expenses from your total income. This is the money you have available for non-essential spending and savings.
Set realistic spending limits:
Based on your disposable income, allocate a realistic amount for each expense category.
Budgeting helps you prioritise spending, avoid unnecessary purchases, and potentially free up cash for those summer fun activities. Remember, credit cards can be helpful for larger purchases where you can take advantage of reward programs or interest-free purchase periods. But for everyday expenses, sticking to your budget could offer peace of mind and help you feel more in control of your finances.
Finding relief when credit feels necessary
We understand that sometimes, using credit cards or other forms of credit becomes unavoidable. Maybe an unexpected cost popped up, or your income isn't enough to cover all your needs. There's no shame in this. Many people face similar situations. However, it's important to be mindful of your credit usage to protect your overall financial well-being.
Payday loans and other forms of short-term credit
Your financial choices are yours alone to make, but it’s important to be aware of some of the risks associated with certain types of credit. A payday loan is a form of short-term borrowing that offers people relatively easy access to lump sums. They need to be fully repaid by your next payday and often come with higher levels of interest than typical lines of credit, like a credit card or personal loan. While it may be tempting, it’s important to be careful. Failing to meet your repayments can make things a lot worse in the long run. Payday loans may also affect your ability to secure a mortgage.
Guidance on loan sharks
Loan sharks are illegal and unauthorised by the UK Financial Conduct Authority (FCA). These lenders may initially appear legitimate, offering almost immediate access to lump sums regardless of your credit history. They typically deal in cash and charge sky-high interest rates.
Loan sharks will offer you money with little to no paperwork
Interest rates far exceed those typically offered by legitimate lenders
They may take your possessions as a security deposit
Frequently use aggressive tactics to collect outstanding payments, including threats and intimidation
If you do need to borrow money, check that your lender is registered with the FCA.
Article from Clear Score Online
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