Seasonality of the household budget
Why is it that our spending levels fluctuate throughout the year? It turns out that, despite e.g. a fixed income, a household spends all its money one month and may even be short of money the next?
The reason for this situation is the seasonality of spending, which over the course of the year is dictated by the change of seasons, celebrations and holidays, as well as the school and holiday calendar. For example, spending increases in December because of Christmas, in June and July because of holidays, and in September because children return to school. Without proper preparation, these periods can put a serious strain on our monthly budget.
The subject of seasonal spending can be managed if we prepare properly. The key is to plan ahead and be consistent.
How do you prepare for seasonal spending?
- Plan and budget seasonal expenses: Instead of being surprised, include these expenses in your annual budget plan. If you know you will spend 500 PLN on a school kit in September, start putting aside 50 PLN a month for this from January.
- Start preparing well in advance: Determine how early you need to put money aside in order to bear a given expense without going into debt. The earlier you start, the smaller the amounts you need to put aside.
- Spread out expected expenses over several weeks, months or even years: Instead of buying everything at once, spread out your purchases over time. E.g. for school supplies, buy one item each month.
- Do not spend money set aside for a specific purpose on other things: Be consistent! If you have set aside money for a holiday, don’t spend it on a new handbag. This is one of the hardest, but also most important rules.
- Positive mental attitude: When you know you are prepared to spend, you feel calmer. Financial stress decreases.
- Looking for additional sources of income: If you are short on seasonal expenses, think about casual work during this period.
- Putting money aside for family events in a separate account/envelopes: This helps to psychologically separate these funds from your current finances. You can set up separate sub-accounts in the bank for specific purposes.
- Taking out appropriate insurance: For example, travel insurance before a holiday, home insurance to cover damage after a flood or fire (this will reduce the risk of sudden huge expenses).