Summer Financial Drought
As originally appeared in The Jerusalem Post on July 1, 2022.
Being a child at home alone in the summer is a high-risk occupation. If you call your mother at work thirteen times an hour, she can hurt you. -Erma Bombeck
I came home late from work one day this week and my daughter announced, “I am going to Montenegro on Monday!” Stunned, I said, “Umm, how was your day?” She then told me how she and a friend have planned a trip and worked out all of the details. 45 minutes later she declared, “I am going to Baku on Monday!” I said, “You are going to Azerbaijan?” She went on to explain that she got a really cheap last-minute deal on a ticket and a cheap Airbnb. I started talking to her and inquired as to the sudden need to fly in the next 100 hours? She started talking about how all her friends are doing cool things this summer and she also wanted to join in the fun.
I happen to be an aficionado of 1980s music. After she made the comment about also wanting to have some fun, I was reminded of the lyrics in the Bananarama classic Cruel Summer:
The city is crowded my friends are away and I’m on my own
It’s too hot to handle so I got to get up and go
It’s a cruel, (cruel), cruel summer
Leaving me here on my own…
Also earlier in the week, my dear wife kindly requested I transfer money for a summer camp, swimming lessons, and our own family vacation. I checked my weather app, and lo and behold the whole forecast was sunny and hot. That means it’s summer in Israel and we won’t see any rain for the next 3-4 months. These drought-like weather conditions are eerily similar to the family financial forecast over the next few months.
What’s a summer financial drought? It’s getting sucked dry of your money. It tends to happen in the summer, when the expense of vacations, summer camps, book and clothes shopping for the upcoming school year, spending money for kids to go to movies and meet up with friends all hit your wallet at once, depleting your bank account.
A couple of years ago I wrote, “A few weeks ago as I was driving some of my kids to school I was listening to a morning talk show. The segment was about increasing government subsidies for summer day camps. As if the topic of government subsidies doesn’t raise my blood pressure enough, they had a guest who was complaining about how expensive summer is for her. Aside from sending 3 kids to camp during July, she was saying that she has to pay for additional camps and a family vacation to Europe in August. That’s when I lost it. I started talking out loud about her complaining about how much it costs to go to Europe for a family vacation. My 5-year-old asked, “Abba, who are you talking to?”
Yes, summer is expensive and I understand that parents get stuck and need to have a plan for their kids and that costs money. What I don’t get is the need for parents to lose all sense of financial responsibility to finance summer vacation. In fact, if the kids see that their parents aren’t disciplined financially, there is a great chance that they will grow up a lack that same discipline. Whatever happened to the golden rule of personal finance: If you can’t afford it, don’t buy it? If you can’t afford a trip to Europe don’t go. As Amazon founder Jeff Bezos said, “The one thing that offends me the most is when I walk by a bank and see ads trying to convince people to take out second mortgages on their home so they can go on vacation. That’s approaching evil.”
I do want to compliment my daughter as she has worked very hard over the last few months to make money to fund her trip. Parents need to be smart. Start planning and saving well in advance of the summer, so that the sudden expenses don’t send you scrambling to try and find the money to pay for them. In addition, there are plenty of ways to keep children occupied that won’t break the bank.
Use the summer to be a good example for your children and spend only what you both budgeted for and can truly afford.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
