5 Tips for Staying Within Your Budget This Summer
After a moody winter, most Canadians will agree that summer is the best time of the year. What’s not to love about great weather, patios, and travel plans? But with all of these events going on, we naturally spend more compared to other seasons. A recent report by Licensed Insolvency Firm MNP Debt says nearly half (49%) of Canadians are worried about how much they’ll have to spend on “lifestyle and social obligations” - something the firm calls the “social squeeze.” To help relieve financial anxiety and keep your spending under control, here are five tips to help manage your money this summer.
1. Define your priorities
Think about what matters most to you, whether it’s travelling, eating out at new restaurants, going to music festivals, upgrading to a new phone, or saving. Pick your favourite things and make them a priority by setting more money aside for those activities.
That said, you’ll also need to factor in events such as weddings or family reunions which may cost money in the way of car rentals or gas, accommodations, and gifts. Take a look at what you have coming up this summer, and don’t be afraid to say no to certain social events if it’s going to cost you too much money to take part. (Some might say this is part of the “loud budgeting” trend that recently took social media by storm.)
2. Make a budget
With your priorities in mind, you can create a budget. First, track your spending using Credit Karma or Wilbur, or even an Excel spreadsheet, so you can see exactly where your money is going.
Of course, your rent/mortgage and bills should be paid first, but after that you can determine how much you can afford to spend on fun stuff.
Now that you know what you’re spending your money on, you can come up with an accurate budget. Remember, things like vacations tend to come up once a year, but you still want to put away money towards it months so you’ll have the cash ready when you’re ready to book.
3. Start a sinking fund (or two)
Take your budget a step further by setting up different bank accounts for your specific savings goals so you can easily track your progress (you can keep track of everything in one place with your chosen budgeting app). You should usually have the following three accounts: a chequing account where your pay is deposited and used for other savings accounts or investments, a savings account for emergency savings, and another savings account for discretionary expenses.
A sinking fund is often used to save for large discretionary purchases like a trip, concert or a new appliance. The way to build a sinking fund is to have an idea of how much the discretionary expense (or expenses if you love both concerts and getaways) will cost you in total. From the total estimated cost, you can calculate how much you will need to save each week or month after you pay for essentials like your rent or mortgage, retirement savings, emergency fund contributions and so on.
A great way to grow your sinking fund is to use a high-interest savings account for your sinking fund. Try to find an account with a welcome bonus that will reward you for setting up recurring deposits, or at least that pays a high rate of interest so you can grow your sinking fund faster. Most regular savings accounts pay 1-2% interest, whereas high-interest savings accounts can pay 4-6% interest. Compare the best high-interest savings accounts to find the best option for you.
Always look for accounts with unlimited transactions and low or no monthly fees. Set up automatic monthly transfers from your main chequing account so you’ll always have money saved. If one of those accounts gets low, it means you need to cut back on spending until you rebuild your funds.
4. Take advantage of free events
Summer is primetime for free festivals, concerts, and events, so take the time to seek them out via local newspapers, radio, and online and plan for the coming months. There’s lots going on across the country for the summer, like street festivals and free admission to some provincial parks on weekdays. Check your provincial government’s official website for more details.
It’s also worth looking into any local attractions to see if they offer free or discounted admission on certain days. Alternatively, there are always free things to do such as going to the beach, hiking, or going for a bike ride.
5. Use a cash-back or rewards credit card
We all spend money year round, so why not maximize your rewards when you’re spending more in the summer, and earn a bit more money or experiences by using a cash-back or rewards credit card?
The best cash-back credit cards refund a small percentage of every dollar spent on the card, usually applied as a credit to your statement once a year or whenever you want to redeem (the particulars depend on the card).
Best for Flexible spending
based on spending $2,200/mo after $0 annual fee
- Earn rewards
0.5% – 10% / dollar spent
- Welcome bonus
$100
- Annual fee
$0
The Tangerine Money Back Credit Card is ideal for those looking for a card with no annual fee. With this card, you’ll earn an extra 10% back on up to $1,000 in everyday purchases within the first 2 months. Must apply by January 31, 2025.. After that, you’ll earn 2% cash back on all purchases within two categories of your choice (or three categories, if you deposit rewards into a Tangerine savings account) with no limit on how much you can earn. Other purchases earn cash back at a rate of 0.5%. Your cash back rewards are unlimited and paid monthly.
Compare all cash back credit cards to find the best card for you.
Best for Groceries & dining
based on spending $2,200/mo after $156 annual fee
- Earn rewards
1pt – 5pts / dollar spent
- Welcome bonus
15,000 points (a $150 value)
- Annual fee
$156
If you want to earn rewards points instead, to redeem on things like car rentals or flights, you’ll want to take a look at a rewards credit card like the American Express Cobalt Card (our pick for the best rewards credit card in Canada). This card gives you 5 points per $1 spent on restaurants, groceries and bars, 3 points per $1 spent on streaming, 2 points on ride shares, transit and gas, and 1 point on everything else. You have many choices for using your points, and you’re not limited to one booking site - so you can find the best deals for summer travel. Another appealing aspect of this card is the included travel insurance, which covers medical costs, trip delays and car rental collision expenses - and saves you the cost of buying insurance yourself.
The bottom line
When it comes to budgeting, there’s no such thing as too much preparation. Knowing how much you want to spend can help you plan a fun summer without going overboard - or over your account limit.
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