Spontaneous nights out. Interesting exhibitions. Events. Weddings. Exciting dining experiences. All the kinds of activities we aspire to fill the (slightly) warmer months with. But summer fun requires summer funds, and amid the ongoing cost of living crisis, the sad reality is that we can’t always afford to do the things we want.

It’s certainly a tough balance to strike. A recent survey by Virgin Money found that nearly a quarter of people in the UK admit to worrying about fitting essential spending and saving into their summer budget. Most of us feel compelled to be more sociable during the summer, yet 21% of women said they want to do more social activities than they can actually afford.

But how can we balance our desire to fill up our social calendars without going broke? Enter: the 50:30:20 method. 

For those unfamiliar, the method encourages people who can afford to split their income into three parts to do so: putting aside 50% for essential spending (such as bills and food shopping), 30% for non-essentials (such as eating out and clothes shopping) and put the remaining 20% into savings. 

50% essential spending – includes bills, regular direct debits and food shops

“While it might be tempting to think about planning exciting activities over the summer, such as holidays, festivals and days out with friends and family, first we need to consider essential spending and any financial commitments and savings goals,” explains personal finance expert Katy Simpson from Virgin Money.

According to Simpson, tackling those essentials first will enable you to have a better idea of how much money you have spare for saving and non-essential spending. “Some may find that the essentials are taking up more than 50% of their budget and, in these cases, it’s always worth checking for any unnecessary spending that could be cut back on,” she adds. 

30% fun spending – includes social activities, non-essential shopping and treats

Next, Simpson advises allocating a set amount of your budget for fun. “Knowing what to spend money on is likely no issue but knowing which social activities to prioritise to help make money go further can be tricky. Our study found that 20% of Brits find it hard to explain to their friends that they can’t afford to participate in social activities, and 17% said they sometimes feel pressured into participating despite not being able to afford it,” she says.

However, it’s important to try to get into the habit of being open about your finances with friends and family. Set boundaries, know when to say no and don’t feel bad for doing so.

“FOMO (fear of missing out) can be a big factor to navigate when it comes to summer plans, but to help stay on track with budgeting and hit their savings goals, it will pay to prioritise the plans they really want to do,” Simpson agrees. “Why not suggest low-cost activities too, such as a picnic in the park, a BBQ at home or a walk around a local neighbourhood in search of hidden gems? That way, people won’t miss out on spending quality time with family and friends and will boost their savings too.”  

20% savings

Finally, the last part of your budget should be kept for savings. It may not sound as exciting as a new pair of trainers, but when most people don’t have £500 savings, it’s never been more important. “Regular saving is important, whether it’s putting money away for something in particular or building a cushion for any unexpected spending in the future, it’s advisable to do your best to save a little each month if possible,” says Simpson.

“Aiming to put 20% of your income a month into a separate savings account is the ideal amount, according to the method. Not everyone is able to stretch their finances to this, so instead, they should work out what they can afford to put away regularly. Little and often is still a valuable way to keep finances healthy ahead of winter.”   

However universal the 50:30:20 method may be, it’s worth noting that for some, the percentages may look different. As Simpson explains: “Some people may find that their spending is more like 70:20:10, so although it’s not important to follow the method to the letter, it’s a good guide to help split your income and manage your money effectively.”  

Images: Getty