When it comes to budgeting, people may be inclined to spend the most time crunching numbers over major expenses such as groceries, debt payments and housing. However, the summer is ripe for special events that can quickly burst a budget. Birthday parties, days at the beach and summer bonfires with friends all come with added expenses that are easily overlooked.
Linda Hobbis, a UK-based blogger who writes for the website Mother Distracted, says people shouldn’t let the added expense discourage them from holding these fun events. “I think we spend so little time together these days that anything which encourages spending time together is really important,” she says.
To spend time with family and friends without throwing finances into turmoil takes some finesse as well as a good dose of self-discipline. “Budgeting is kind of an art that isn’t much practiced,” says Linda Matthew, owner of MoneyMindful Personal Finance Coaching in Sacramento, California. Here are four steps to get it right.
1. Estimate the expense. It can seem impractical to budget for highly irregular activities that often happen without much notice. Families can’t always predict when children will be invited to birthday parties or when the mood will strike to invite friends for steaks on the grill.
That’s all the more reason to plan for the cost. “If we don’t budget for it, then it’s insanely stressful,” Matthew says. This form of financial planning doesn’t have to be exact for those who have wiggle room in their budget. However, those who live paycheck to paycheck or who will be putting on a larger affair should have a fairly accurate idea of their expenses.
“There’s nothing worse than knowing you can’t afford your own party,” says Frank Madeira, vice president of finance for Affinity Federal Credit Union. His advice is to do the math prior to sending any invitations.
[Read: How to Throw a Kid’s Birthday Party on a Budget.]
2. Set money aside all year long. Families shouldn’t try to budget for these irregular expenses on a month-by-month basis. Instead, Matthew recommends they pool all the estimated expenses for the year into a single “set-aside account,” which can simply be a subset of a current savings account. For instance, if a family can reasonably expect their child to be invited to three birthday parties and they plan to host two large gatherings for friends each year, all those expenses should be totaled and then divided by 12. That’s the amount to save each month.
“If you want to make it a bit of a game, try rounding down your current account balance to an even figure and send the change to your savings account — either weekly or daily,” Hobbis says. “You’ll be amazed how quickly it mounts up.”
That may be a good way for those with little discretionary income to save, but read the fine print on the account first. Some banks may charge for excessive transfers. “Find a financial institution that doesn’t hit you with a lot of fees,” Madeira advises.
[Read: How to Save Money With DIY Party Ideas.]
3. Cut costs wherever possible. If you aren’t able to save enough to throw the kind of party you want, don’t let that discourage you from hosting your friends. “I think the focus should be on enjoying the company rather than creating a five-star dining experience,” Hobbis says.
Tea lights and inexpensive table linens from a vintage or thrift store can set the mood, while asking everyone to bring a potluck dish is socially acceptable among friends. If you need to buy food, Hobbis recommends saving supermarket loyalty points or discounts for special occasions.
Madeira suggests people take advantage of credit card offers with large reward bonuses. Points can be redeemed for cash back or merchandise that can be used for entertaining, birthday gifts or other special occasions. The catch is to pay off the balance each month. Otherwise, the card will cost more than it’s worth.
[Read: How to Plan and Execute a Memorable Retirement Party.]
4. Evaluate at the end of the year. Since special events and parties are difficult to predict, it becomes essential to keep careful records all year long and then calculate the total that you spent. “I almost hate to say that because it is asking so much,” Matthew says. However, for those who are serious about plugging holes in their budget, it’s a crucial step.
“We all want to get together and create those memories to last a lifetime,” Madeira says. “But we don’t want the bills to last a lifetime.” Using this basic four-step budgeting system can help ensure you continue to have birthdays and barbecues with friends without worrying about them breaking your budget.
More from U.S. News
10 Ways to Celebrate Your Retirement
4 Ways to Buy Gifts for Less Than $20
A Summer Gift Guide for Hosts and Hostesses
Budgeting for Special Events: How to Avoid Going Broke on Birthdays and Barbecues originally appeared on usnews.com
