Summer has well and truly arrived in the UK, and while many Brits enjoy making the most of the good weather and fill their diaries with activities and social plans, it can be difficult to know how to enjoy a ‘summer of fun’ while keeping on top of your financial commitments and goals, particularly in the middle of a cost-of-living crisis.
A new survey of 2,000 Brits* by Virgin Money Link opens in a new window found that nearly a quarter (22%) admit to worrying about fitting essential spending and saving into their summer budget. Additionally, 19% said they want to do more social activities than they can afford to during the summer. This rises to 21% among women, who are more likely than men (16%) to say they can’t afford to do all the activities they want to due to their budget. With 60% of Brits saying they feel compelled to be more sociable during the summer months, it is no surprise that balancing a budget might feel like a struggle.¹
To help inspire Brits on how to have a summer of fun while still managing to save, Katy Simpson, personal finance expert at Virgin Money Link opens in a new window, shares her tips for how to structure your budget to make the most of your summer.
Katy says: “The 50:30:20 budgeting method is trending on TikTok right now², and for good reason. The method encourages people who can afford to split their income into three parts to do so, putting aside 50% for essential spending (such as bills and food shopping), 30% for non-essentials (such as eating out and style and beauty) and put the remaining 20% into savings. Following this simple method for budgeting over the summer months will allow people the fun and freedom they want while still being responsible with their money.”
50% Essential spending
Includes bills, regular direct debits, food shops
Katy shares: “While it might be tempting to think about planning exciting activities over the summer, such as holidays, festivals and days out with friends and family, first Brits need to consider their essential spending and any financial commitments and savings goals. Tackling those essentials enables people to have a better idea of how much money they have spare for saving and non-essential spending.
“Some may find that the essentials are taking up more than 50% of their budget. In these cases, it's always worth checking for any unnecessary spending that could be cut back on. For example, is that gym membership or streaming subscription being used enough to justify the cost right now? If not, consider pausing or cancelling the membership/subscription until it’s needed again.
“It’s also useful for Brits to check whether they’re paying more than they need to for essential bills. People should check their phone contract, if it's running over the initial contract period and they haven’t upgraded, they might be eligible for a reduction on their bill. They can also shop around for providers offering cheaper deals on services like broadband or car and home insurance.”
Social activities, nonessential shopping, treats
Katy explains: “Knowing what to spend money on is likely no issue but knowing which social activities to prioritise to help make money go further can be tricky. Our study found that 20% of Brits find it hard to explain to their friends that they can’t afford to participate in social activities, and 17% said they sometimes feel pressured into participating despite not being able to afford it. Try to get into the habit of being open about your finances with friends and family. Set boundaries, know when to say no and don’t feel bad for doing so. “FOMO (fear of missing out) can be a big factor to navigate when it comes to summer plans, but to help Brits stay on track with budgeting and hit their savings goals, it will pay to prioritise the plans they really want to do. Why not suggest low-cost activities too, such as a picnic in the park, a BBQ at home, or a walk around a local neighbourhood in search of hidden gems. That way, people won’t miss out on spending quality time with family and friends and will boost their savings too.”
Katy comments: “The last part of the budget is kept for savings. Our research found that one in five (22%) Brits struggle to save and do the summer activities they want to. Regular saving is important, whether it’s putting money away for something in particular or building a cushion for any unexpected spending in the future, it’s advisable for Brits to do their best to save a little each month if possible.
“Aiming to put 20% of their income a month into a separate savings account is the ideal amount according to the method. Not everyone is able to stretch their finances to this, so instead, they should work out what they can afford to put away regularly. Little and often is still a valuable way to keep finances healthy ahead of winter.”
Katy concludes: “The 50:30:20 method uses percentages making it easy to apply to a variety of incomes and so it can be quite universal. However, it’s worth saying that for some, the percentages may look different. Some may find that their spending is more like 70:20:10, so although it’s not important to follow the method to the letter, it’s a good guide to help Brits split their income and manage their money effectively.”
For more information about Virgin Money and online banking, visit: https://uk.virginmoney.com/current-accounts/ Link opens in a new window
*Survey of 2,000 UK respondents, nat rep. Field work carried out 09/06/23-12/06/23