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After nearly three years of COVID-19 lockdown, we’re all itching to see the world and reconnect with far-flung family members. Then, food, fuel and shelter prices began to soar. In such an inflationary landscape, how can you afford the fun things in life, such as a winter holiday, new recreational equipment, leisure activities or entertainment? Rest assured, such things can fit into even the tightest household budget.
Use the 50 / 20 / 30 Rule
Using the 50 / 20 / 30 rule to budget can help you save for the fun things in life. A rough budgeting guide is to allocate 50% of your income for things like food, rent, transportation and utilities. Set aside 20% of your income for long-term savings goals, like retirement and debt reduction. Finally, reserve 30% of your income for fun things like entertainment, travel and leisure activities.
A More Modest Plan
With rising costs, setting aside 30% for entertainment may be out of reach of some households. However, saving even 10% of your monthly net pay (what you bring home after taxes and other deductions) is enough to cover a winter getaway or ski trip if you save diligently. If fun to you means restaurant lunches and dinners, fitness classes or the movies and not a tropical getaway initiating a savings plan to pay for these smaller-priced fun things is still an excellent idea.
Pay Yourself First
Another good budgeting strategy is to pay yourself first. Establish what your goal is, how much you can put towards it, and what timeline is needed to achieve it. Next, create a separate savings or tax-free savings account with pre-authorized monthly automatic deposits until you have saved for the full estimated cost of a getaway. This will keep your savings account growing and keep you on track to achieve your goals.
Buy Travel Insurance
If your fun takes you away from home, don’t forget to buy travel insurance. Travel insurance should include enough coverage for emergency medical care expenses for you and your family, due to illness, accident or quarantine. It’s also a good idea to buy travel insurance that includes coverage for lost or delayed luggage as well as flight cancellation. During the pandemic, airports and airlines undertook drastic cost-cutting measures due to low demand. When the skies re-opened, lost luggage claims skyrocketed while tens of thousands of flights were cancelled. Baggage loss coverage provides reimbursement for luggage and covers items that are lost or stolen while you’re travelling.
To help you develop a savings plan that works for you, contact one of our NPSCU financial advisors at 1-877-787-0361
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