It’s summer, and the rules are off, right? Ice cream for dinner! Late bedtimes! Expensive vacations!
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Think again.
“Your budget shouldn’t change because it’s summer. Your expenses will differ from the school year, but your budget is like your waistline — you do not want it to expand,” says Stephanie Yates, Ph.D., assistant professor of finance in the UAB Collat School of Business at the University of Alabama at Birmingham.Yates says your budget should look similar to this:
- 50 percent for needs
- 30 percent for wants
- 20 percent saved
In the battle of needs versus wants, Yates says, “Ask yourself, ‘will my family survive without this?’ And be honest. A new pair of shoes is a need only if you don’t have any shoes.”
Wants are everybody’s favorite. You have nearly a third of your pay for this. Splurge within your budget, she says.
For big expenses like vacation, camp or home improvements, ask your bank to create a summer account, like a Christmas club. Treat this extra cash like sunscreen: spread it around as much as you can without getting burned – and when it runs out, stay inside.