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How to get your finances in order over the summer break

With the summer holidays upon us, now is a good time for reflection and relaxation. At Unividual we encourage our clients to ‘fix the roof while the sun shines'. Managing your finances is one of those things that is good for you to do but for whatever reason procrastination kicks in and you might not always have a handle on things. This happens to the best of us, so we take a look at some of the things you could be doing this summer to set you up for the future.

Or head over to: 5 tips to reduce money stresses

Plan your finances this summer

Did you get a bit of impetus over the New Year to address things like health and finances? There is countless research that shows only a few people stick to their new regimes for any meaningful period of time. So, why not use this time of year to ‘fix your financial roof while the sun shines’. You might already be looking at whether you are utilising your tax allowances, combining pension pots to save on administration charges, or making a Will.  These are all just some of the things that a good financial adviser will make sure you sort out. However, if the recent pandemic has shown us anything, there is a real need to make sure our personal financial safety nets are in good enough condition to weather any future storms. We can break these into 3 key areas:

1. Reviewing expenditure

2. Managing debts

3. A simple way to motivate you to save

Reviewing expenditure

We all know that comparison websites help you save money, so why do we not get around to using them? Saving money on things like utility bills sounds like a no brainer. Yet it takes time, effort and energy to compare different providers and organise the switch – a cost that you weigh up versus the saving made.  Behavioural research shows that it is imperative that we reframe this inertia from – ‘doing this will save £x’ to  ‘doing this will prevent me losing £x of my hard earned money’. The science shows that this can increase our propensity to act by around 300%.  You can also apply this mindset to your regular expenditure: ‘how much am I losing from not getting the best deal’. This might provide the push you need and if not think about your favourite thing, like going out for meals  for example,  and how this saving could contribute to you enjoying yourself more whilst also putting a little extra disposable income aside to build up an emergency pot and then some savings.

Managing debts

If you have more than one debt (e.g. credit cards, loans, mortgage), logic suggests addressing the debt with the highest interest rate first by overpaying. However, behavioural economics research suggests that you may form better long-term financial habits by clearing off the debt with the smallest outstanding balance first.  By doing so, it creates a feeling of success, completion, closure, and satisfaction.  It’s more likely to lead to you continuing onwards and clearing your next debt.

How to motivate yourself to save

We all know the phrase ‘don’t put off until tomorrow, what you can do today’. What if you decided to save, but selected the date to start in a few months’ time, rather than now? Logic suggests that the sooner you start the better it will be, as you build up funds more quickly and benefit from the secret sauce of compound interest.  However, to some it means that the ‘pain’ of saving money hits sooner, which can either decrease the amount you are willing to save regularly, or even put you off doing it all together. Behavioural research has shown that if we decide set a start date a short time in the future, and can tie it in with an event, such as a salary review, birthday, or the end of term, then we are more likely to select a more realistic amount to save. So, when the time comes for it to start, we feel far less impact emotionally and logically to our disposable budget.

Another good tip is to put bonuses or pay rises towards savings or to build your retirement savings pot. Like the old Chinese proverb says, ‘the best time to plant a tree is now, and twenty years ago’. So, there really is no time like the present to get on and ‘mend your financial roof while the sun shines.’ Plus, most people find that shortly after saving you will soon readjust your outgoings and adapt quickly and find ways to ensure you don’t appear in your overdraft at the end of every month.

Allay all your fears about financial advice

A lot of people find the prospect of organising their finances scary. We put it off because we don’t have the experience and knowledge, we don’t have the time to learn the science behind money management and we get mightily concerned that we might not take enough risk or take too much and loose it all. Doing nothing can actually do more harm than taking the brave decision to seek financial advice. A lot of people think they aren’t rich enough for financial advice, or they worry they are too young or too old. Others assume they can’t afford it or they wont find a financial adviser that will understand and relate to them personally. We get all this which is why Unividual do things differently. With the summer holidays upon us, now is a good time to find out more about the benefits of financial advice and how a lot of your fears can be resolved just by picking up the phone and starting the conversation with one of our approachable financial advisers.

Author & Editor: Cherie-Anne Baxter

Date: 2nd August 2022 – information and facts are correct at the time of writing.


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