Summer is a time when people tend to disregard their finances – with gorgeous weather and time off from work, it’s easy to focus on having as much fun as possible with travel, family barbecues and frequent parties, while putting money matters in the backseat.  If you’ve overspent this summer or failed to follow a savings plan or budget, don’t worry – it can probably be fixed. Here are five steps to help get your finances back on the right track:

Create a budget

Most people don’t have any financial plan, or budget, which makes tracking income and expenses more difficult. Creating and maintaining such a blueprint – one that details what’s coming in and what’s going out – can be a key to gaining better control of your money and improving your situation.

All that’s needed to set up a budget is a notebook or a computer spreadsheet program like Excel. The first step is to list monthly income – this includes after-tax earnings from work, including side jobs and freelancing, interest on investments and dividends, Social Security payments, and any other re-occurring cash receipts.

Next, record fixed monthly expenses, such as what you pay for a mortgage or rent, installment loans, utility charges and insurance, as well as the typical outlay for fuel, food and necessities such as household items, clothing and shoes. The list should include every purchase – the morning coffee, the week’s cleaning – or regular bill, no matter how big or small. Setting it all down will provide a clearer picture of where the money goes each month, and help you determine where cut backs can be made.  

Cut nonessential spending

One way most people can increase savings is by minimizing discretionary spending, such as dining out, entertainment and unnecessary travel. Cutting or eliminating these expenses may save hundreds, if not thousands of dollars each year.

But first, categorize “wants” such as entertainment and “needs,” like utilities. Things like extra cable packages, magazine subscriptions, expensive cell phone plans, going to the movies and attending concerts probably can all be pared back, while the amount needed to ensure the electricity and heat stay on is likely to be far less flexible. Truly discretionary expenses should go on the chopping block in favor of building savings faster.

Start using coupons

Coupons can offer considerable savings on groceries, household supplies and other necessities. The average savings per coupon used last year was $1.94, up from $1.44 in 2011. Consumers saved more than $4.9 billion, up 4.5% from 2012, according to share certificate, where the money will grow.

Even if you overspent this summer, these steps should help you get your finances back on the right track.


Steve Nicastro, Nerdwallet