Spending strain: Tips to prepare for a surge in summer expenses

The coming summer looms financially as the toughest time many have experienced, so here’s how to prepare rather than perish.

Anthony KeanePersonal financial writer

@keanemoney

3 min read

October 23, 2024 - 2:30PM

The Australian Business Network

Household finances will be squeezed in the coming months, so now’s the time to act. Picture: iStock

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Summer is just over a month away and is set to scorch bank accounts across Australia.

Christmas is always expensive, but so are holidays and other leisure activities, and Aussies have refused to give up on travel despite the surging cost of living.

Throw in catch-ups with family and friends, January credit card bills and back-to-school costs, and household budgets must be braced for the big-spending season.

Money experts say the recent stage three tax cuts – which the Albanese government broadened to put money in more peoples’ pay packets – have mostly been used to ease financial strains in households rather than give people extra cash to spend on fun stuff.

Beyond Bank chief customer officer Nick May says summer spending can put a financial strain on many families.

TOUGH TIMES

“This year especially we expect many families to feel the pinch, as household budgets are as stretched as they have ever been with cost-of-living pressures making money super-tight,” he says.

“We know there are far less savings in family bank accounts this year and that means it’s going to be tougher than ever to get presents, spruce up the house and entertain family and friends.”

Australians ‘most concerned’ about cost of living and housing

May says the July tax cuts did not result in increased savings, “so it’s safe to assume that any extra money has quickly been absorbed by increases in our bills, repaying our home loans and other day to day costs”.

Money coach Karen Eley says none of her clients have been able to proactively use their tax cuts to grow their wealth.

“Consistently across my clients, the entire amount has been used to absorb cost of living increases,” she says.

“I think there are a lot of people out there with economic anxiety as we move into holiday season.

“It’s been several years now of low wage growth and high inflation and mortgage interest rates, which has significantly impacted household budgets.”

Eley says electricity bills can hit hard in warmer weather, because while in winter people can rug up and avoid high energy costs, “it’s a lot harder to regulate yourself when it’s hot weather and airconditioning is vital”.

SPENDING CUTS

Now is the time for families to look ahead, budget for the looming spend-a-thon, and prepare their finances.

Cutting back on discretionary spending now can help, Eley says. Think cooking at home rather than eating out, suspending entertainment streaming services if not being used, and avoiding impulse purchases.

Pre-Christmas shoppers can leverage the sales, such as Black Friday next month, to buy gifts on sale them save them for Christmas, Eley says.

“You can do the same thing with non-perishable pantry items when they are on sale at the supermarket,” she says.

Money coach Karen Eley. Picture: Heidi Wolff

Beyond Bank’s Nick May. Picture: Supplied

“Initiate conversations with family and friends early, to set expectations of a gift value limit, or suggest a Kris Kringle or Secret Santa approach where each person only needs to buy one gift.

“Look for additional income sources such as a casual job – more are available this time of year, overtime opportunities, or sell unwanted items.”

Beyond Bank’s May says expenses hurt more when we don’t plan for them.

“By planning ahead and creating a budget we know what we can afford – this helps ease the pressure and stress on the whole family,” he says.

“Christmas comes every year so brace for it.” Saving small amounts over the year helps with this.

And avoid leaving all Christmas shopping, travel spending and other summer expenses until late November and December.

“Being organised will generally allow you to shop around for the best price – leaving things until the last minute leaves you little time to ensure you are getting the best deal or value for money,” May says.