Make the most of the ‘back to school’ feeling (and the kids actually being back to school and out of the way) to do a full financial reset.
Kids back to school? Time to reset your finances
Summer is an expensive time of year. Whether you’re packing a suitcase to head off on holiday, keeping the kids entertained, attending weddings or simply spending more time enjoying the warmer weather – sticking to a budget can be tricky, even with the best laid plans.
As children get their school uniform ready for the new term in September, Autumn is a good time to reflect on your finances to have them in line before the peak spending moment of Christmas. By putting a budget in place now you can monitor your spending over the last few months of the year and have a clean slate for when the New Year comes around.
Create a Back To School Budget
Long, lazy lunches with friends, day trips with the kids, flights, hotels… the list goes on. However, the holidays are drawing to a close and now that life is returning to normality, it’s time to create a budget and stick to it. Be clear about what you have incoming, be honest about your outgoings and set a target of how much you want to put aside each month. Figure out what works best for you in regards to tracking your spending, you can do this on computer spreadsheets, budgeting apps or on the back of an envelope!
Find The Best Deals
Looking at where your money is going is a good place to start. Retail businesses are well aware of the ‘back to school’ feeling everyone gets in September, whether that’s buying new pencil cases for the kids or a new coat for you. Be realistic about what you actually need to buy, and look out for any deals and discounts, especially on supplies for the kids. Now is also a good time to look at shopping around for your energy tariffs before the colder months hit.
Look to the future (long term and short term)
It’s important to have long and short-term goals to consider when looking at the bigger financial picture during your reset. It’s hard to believe it but Christmas is just over five months away and The Share Centre found three fifths (60%) of Brits will be dipping into their life savings to pay for it, but these funds should really be ringfenced for financial emergencies. By having specific budgets for expensive times of year like Christmas, it’s easier to know what needs to be spent and what can go into long-term investments, and makes it harder to get carried away spending big on tinsel and turkey! For many, there is a misconception that money placed in an ISA must be immediately invested – this is wrong! Start squirreling your money into your account, remaining un-invested until you have enough accumulated – or the time is right – to plunge back into the market.
Alternatively, start investing now specifically for Christmas and join the 2.7mn Brits who will be using their stocks and shares investments to at least partially pay for the festive season this year through the profits.
Deal with your Debt
If your credit card saw more use over the summer or if the overseas holiday was paid for with a flexible payment scheme, then now is the time to address any outgoings that may be putting you in the red. Websites like Money Saving Expert are a good place to start with help on how to manage and pay off existing debt, and even better, start looking at how you can boost your income by selling clothes and household items on eBay or monetising a hobby.
Know the difference between what should be saved and what should be invested
Putting aside money in a savings account is a way to put your mind at ease for any financial emergencies, such as sudden unemployment, illness or even smaller things like unexpected repairs – the accepted rule of thumb is that you should have enough to last you three months in an instant access savings account. However, anything above this means that your savings are accruing little to no interest, and you should look to invest. Richard Stone, CEO of the Share Centre says “a stocks and shares ISA can be opened with relatively small contributions, and by investing little and often it’s easy to start building up a portfolio. Make investing a vital part of your financial reset, to ensure that your money is working as hard as you do”.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.