Surviving the Slump: How to control spending during summer vacation

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WATCH ABOVE: During tough economic times, some simple budgeting plans can alleviate overspending. Angela Lock of Grant Thornton breaks down some key factors to stay afloat during the summer months – Aug 3, 2016

This year has been tough for Alberta’s economy, but there are many ways to control spending during summer vacation season.

In the summer, consumers tend to indulge more on social outings, outdoor activities, and travel. This leaves many people behind on daily routines, such as personal budgeting and financing.

Angela Lock is a licensed insolvency trustee with Grant Thornton, a Canadian accounting, business advisory and risk management firm. She advises her clients on how to reduce debt and spend within their means.

“The biggest tip I have is: don’t spend money you don’t have,” Lock said. “Especially if you don’t want to pay an arm and leg for it down the road.”
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Watch below: A selection of video from Global’s special series – Surviving the Slump

According to a recent BMO Report, 39 per cent of Albertans will incur a small debt due to summer spending and 65 per cent don’t have a concrete plan for repaying this debt.

“Take a look at your monthly expenses and then cut back,” Lock said. “Maybe you’re making an adjustment in your clothing or eating-out budget.”

Experts advise proper budgeting and financial planning for staying on top of summer finances. Summer sees the highest number of impulse purchases than any other season, signaling a lack of discipline for summer budgets.

Another recommendation for those hoping to vacation this summer is to instead have a “stay-cation”–a vacation without leaving where you live.

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“Check out those ’20 free things to do in Calgary’ articles,” Lock said. “There are packed with outdoor movies and activities for free a lot of the days.”

4 key factors for building a vacation budget:

  1. Don’t take a holiday from your budgeting: Look at personal cash flow coming in and compare it to your monthly expenses to figure out how much can be realistically saved for a vacation. With the current economy in mind, a summer vacation may not be feasible this year.
  2. Use a prepaid credit card: Funds are paid in advance with prepaid cards, capping overspending.
  3. Have a plan: Make a payment plan before starting the summer spending. Be aware of the additional cost of interest and pay off debt within a reasonable time frame.
  4. Ask for help: Use some of the many online tools to set and monitor budgets, some in real time.

Consumers should be aware of prepaid credit card rates as they differ from company to company. Lock suggests checking with your own bank first to see if they offer prepaid or zero-dollar limit credit card options, before purchasing a third-party prepaid card in a store.

For budgeting apps, there are many available in the app stores that track and monitor spending.

Some of these apps also have the option to look at previous monthly spending to set hard budgets for future months.

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“Planning is key,” Lock said. “If you plan ahead to spend $2,500 and have it aside and waiting, you aren’t accruing more debt.”

The popular budgeting app “Mint” is on Lock’s list of recommendations, because it links directly to your bank account for up-to-the-minute updates on spending and weekly graphs to track progress.

Whether or not you use any budgeting tools, Lock advises that you always ask yourself: “If I do this now, how will I pay for it?”