Financial Detox: How to Save Money After the Summer Break

Who doesn’t like summer? Fun days on the beach, outdoor parties, and summer weekends are just a few of the countless reasons to love it.

But the extra activities and joys of summer, like dinners out and vacation, often result in a hectic schedule and… an empty wallet.💸

According to a recent survey, the average European planned to spend about €1,805 on summer holiday travel in 2022, up from nearly €1,600 in 2021.

And if you have children, add in summertime childcare costs, tutoring, and camps… No wonder summer is the second most expensive season that can make you feel a little overwhelmed.

But fear not. This SPOTLIGHT starts a series of articles on personal finance that will cover saving and investing, as well as the very basics of dealing with money.

So if you want to give your wallet a break and save up some money for the upcoming winter months and years to come, there’s one thing you can do right now:

🥬Financial detoxing.

What is a financial detox?

It’s like a detox diet when you take a break from the overload of toxins that include processed and junk food, caffeine, alcohol, and sugar.

In other words, it’s all about being mindful of what goes into your body… or, in our case, out of your wallet.

Similar to physical detoxing, a financial detox involves examining how you spend your money and cutting out bad spending habits.

But, like with a juice diet🧃, you have to be strict: decide which areas you want to focus on and for how long.

Start easy by creating a savings plan and try to stick to it for at least a month.

Or simply use this cheat sheet:

Get rid of bad (spending) habits

It may be centuries old, but Socrates' famous phrase, "Know thyself", still holds true today.

To break bad money habits, you must first understand why they exist. Think about your “money mindset” and attitude towards money:

Do you run out of money before the end of the month?

Do you tend to make impulsive purchases?

Are you more likely to spend money when you are sad?

If you answered yes to these questions, it's probably time to change your money mindset.🤓

Here are several things you could do:

• Use cash: to avoid overspending, it may be a good idea to use only cash, at least for some time. Based on your budget, take out some cash at the beginning of the week, and stick to that.
• Avoid impulse buying: next time you're tempted to buy something out of the blue, try waiting 24 hours before making that transaction. There's a good chance you won't need that item after all.
• Substitute: if you enjoy good food, try cooking it at home instead of buying lunch; if you love books 📚 , visit a charity store instead of going to a pricey bookstore.
• Download a budgeting app: with some banking apps, you can block specific types of spending or set a limit on your spending. This way, you will be able to keep track of your long-term savings goals, as you will have transparency over your income and expenditures.

Most importantly, try not to dwell on your past financial mistakes! Why? Because failure is the path to success!

Every person makes mistakes and has money problems, but you can use them to learn lessons and grow. This includes improving your finances.

So instead of dwelling on what went wrong in the past, make a plan to do better in the future based on the lessons you learned.

Set yourself a financial challenge

Setting yourself a financial challenge is a quick and simple way to encourage you to start saving money. But before you start, make sure you have an end goal in mind, whether that’s a down payment, your “rainy days” fund, or some other goal. This way, you will have something to work toward and stay motivated throughout the year.

Here are a few challenges you can try right now:

The “no spend” month

Try not to spend money on anything except essentials for a month. Non-negotiable expenses include basic groceries, car insurance, travel costs, rent or mortgage repayments, electric bills, and medication.

That means saying no to all additional spending, like:

• Clothing that isn't essential
• Coffees and eating out
• Beauty treatments
• Trips out to concerts, cinema, etc.
• Streaming services

If a month-long saving challenge sounds too much, consider doing a no-spend week every month for a year or a no-spend weekend every two weeks.

The 52-week challenge

In this challenge, you'll set aside an incremental amount every week, and after 365 days, you'll have saved more than you expected.

The rules are pretty simple:

You have to put aside €1 the first week, €2 the second week, €3 the third week, and so on until you put away €52 in week 52.

Thanks to this easy challenge, without realizing it, you will easily save €1,378 in a year!

Of course, you can get creative with the amount you save each week if you don't have enough extra cash for the regular challenge or you would like to save more over the year.

The 365-day challenge

If you went through the 52-week challenge, the 365-day challenge would be a step further toward building your “rainy day” fund.

The only thing you need to do is transfer a small amount of money to your savings account every day.

You can do this by setting up a standing order to automatically transfer the amount you can realistically afford to put aside each day. Thus, saving this way won't require you to change your lifestyle drastically.

Here are some tips for how to start building your emergency fund.

What’s the bottom line?

Financial challenges like the “no spend” month and the 52-week challenge are meant to give you a “financial deep clean” by helping you to get rid of any bad habits you may have with your money.

In no way should this feel like punishment. No matter how scary it may seem in the beginning, constantly remind yourself you can do this.💪

Focus on taking small steps every day, and before you know it, you will have made great progress.

Check out our SPOTLIGHT for more money-saving tips, and stay tuned; In the following article, we’ll take a look at the next step in your financial detox: learning the basics of how to build your savings.