How to Get Your Money Back on Track After Summer Splurges

For many growing up, summers used to mean camp, school vacation, part-time jobs, and internships. But for Millennials, specifically those in their mid-20s to early-30s who might have some more discretionary income, the word ‘summer’ can sometimes become synonymous with ‘splurge.’ Summertime is the season for concerts, new wardrobes, dinners out with friends, and you guessed it – travel, travel, travel.

Which makes total sense! The weather is nicer, the days are longer, school is out, and work is typically slower. But don’t be fooled, airlines, hotels, concert venues and even those Airbnbs, know summer is prime time too. According to the 2018 Travelport U.S. Vacation Survey, Millennials (ages 18-34 years old) are most likely to spend more on their upcoming vacations than other age groups, with one out of three willing to spend $5000 or more!

Typically with this type of experiential spending – whether it be a fancy dinner spot during your vacation in Italy, a museum tour in London, or a must-see artist on tour – it can’t be returned. An experience is not like an expensive pair of jeans you bought at Nordstrom on impulse because hey, you look good and why not #TreatYoSelf. Those can easily be returned if you revisit and find they aren’t worth the investment, but spending a day on a rented boat? Not so much.

So if your spending this summer got (or is still getting!) a little out of hand, it’s time to get back on track. 2018 isn’t over, people! Use the next five months to regain lost ground on personal finance goals. Here’s how to get started.

Assess the Damage

Ok, so you went a little bit overboard? As the expression goes, ‘there’s no use crying over spilled milk,’ and there’s no point in stressing over purchases that can’t be returned. Honestly, we’re all human and we all make mistakes – especially financial ones! The good news? Nothing can’t be undone. Yes it may take a while to rebuild a credit score or a savings fund, but there are plenty of ways to get things back on track with Intuit’s loan calculators and budgeting tools.

First thing’s first: rip of the bandaid, look at the damage done, and ask yourself a few questions. How high is my credit card bill? Can I afford to pay this off now? When is my next paycheck? Will that help cover some of the splurge? I don’t want to dip into my emergency fund, but do I need to? The best counteract to getting overwhelmed is getting organized. Spend time checking your bills and looking at your bank account balance and credit statement.

The next step? Rewrite your budget to fit your current reality. “Budgeting” makes people think of limiting their fun and restricting their choices, but if you take the holistic view, budgeting actually helps relieve constraints and increase life choices down the line. Mint helps you build personalized budgets that make sense for you today and set you up for success tomorrow. If your wallet had an active, lively summer, maybe try to cool it down a little in the fall to rebalance. Think: home cooked meals, fewer workout classes, and no overpriced lattes.

Take Action

Whether your 2018 personal goals include reducing credit card debt, spending less, adhering to a budget, or paying off more loans, the best thing you can do to get back on the horse is to check your credit score. Our friends over at Turbo give you your score completely free and with personalized advice to help get you where you want to be financially.

If you see your score has taken a ding – don’t freak out! Working to improve your credit and your credit score might seem like black magic, but I promise it isn’t. In reality, your credit score is based on very real, very measurable criteria – and you do have the power to change it. Here are three of the easiest ways to improve your credit score:

• Set up autopay: Whether or not you make payments on-time is the single most important element in the calculation of your credit score. As long as you pay your bills on or before the deadline, your score will be in good standing.
• Increase your credit limit: One of the biggest factors in determining your credit score lies in how much of your current credit balance you’re using. Every credit card has a credit limit or a maximum amount you can spend. Your credit score will take a hit if your credit balance is more than 30% of the available limit. WARNING: do not use this increase as an excuse to up your spending!
• Keep old accounts open: Your credit age makes up 15% of your credit score, and the only way to increase the age is to keep old accounts open and avoid opening new ones. Every time you open a new credit card or take out a new loan, the average age of your score decreases. In other words, if you just sit tight with the accounts you have now, your score will likely increase on its own.

Learn from Your Mistakes

We’ve all seen the movie clip of a shopaholic freezing her credit card in a block of ice. This may be semi-effective, but is it realistic? Hell no. It may be a way to tackle spending right now, but it’s hardly a long-term strategy. The best way to really take hold of your finances and get back on track is to be real with yourself. Have the #RealMoneyTalk with yourself, set goals, and actually work on keeping them!

Remaining aware of how much you are really spending with a credit card also helps to encourage cautious consumption. In addition, try leaving it behind every so often. Although we’ve been encouraged to “never leave home without it,” there are moments when this advice may actually make it seem easier to use it rather than being cautious of what that phrase really means. Most days, leaving the credit cards at home isn’t an inconvenience and carrying a debit card or paying with cash will help you feel more in charge of your finances while setting you up to improve your numbers.

Splurging, especially in the summer, is fun, exciting and easy, but it IS detrimental to your financial health. The best way to get ahead of the urge to spend is to again, be real with yourself. Building money into your budget for little (and occasionally big) indulgences is a healthy way of allowing yourself the ability to afford something fun while keeping yourself on track with your goals. This also helps you  battle “frugal fatigue” and prevent yourself from making impulsive purchases.

What did you splurge on this summer? Shake it off and tell us in the comments!