Did you skip going on a vacation last year because money seemed too tight? Does it seems as if saving for a vacation is out of reach? If so, it is time to make some changes to your spending and savings habits so you can easily afford a relaxing vacation this year.
Travel is not cheap these days. It will take careful research and planning to afford airfares, hotels, car rentals and activities. Saving for a vacation is a lot like budgeting for other major expenses. Check out these tips to help you budget, plan and save for that dream vacation!
Budgeting Tips to help you Save for a Vacation
Open a Savings Account Dedicated to Your Vacation
Most people have a single savings account which they tend to use for emergency funds, making it difficult to set aside money for a specific purpose. Consider opening a dedicated savings account for your vacation to ensure the money you set aside for a actually gets used for a vacation and not for an unexpected bill.
If you already have a checking and/or saving account, most financial institutions will not charge you large fees or waive minimum balance requirements when opening a new savings account. In addition, you may be able to negotiate the best rate when opening your vacation savings account. And if you open the account with your current bank you can save time from having to travel around town to manage your accounts at separate locations.
If your financial institution doesn’t offer you the best rates, comparison shop different rates and restrictions on savings accounts, online savings accounts, money market accounts and certificates of deposit to see which one will provide the best return on your savings with the flexibility to withdraw the money in time for your trip.
Pay Yourself First and Automate Your Savings
Once you have a dedicated savings account for your vacation it is time to take on another budgeting strategy: paying yourself first and automate your savings. Most people earn a paycheck, deposit into their checking account, pay their bills and use the rest for discretionary spending before setting aside money for emergencies or major purchases. This makes it extremely difficult to reach your longer-term goals and needs, like a house, retirement or a vacation.
Determine how much amount that you can afford to set aside from each paycheck. Then go to your bank to start an automatic transfer of funds from your checking to your vacation savings account each month or paycheck. This way you will have less money to spend on unnecessary purchases and you will have a better chance of meeting your goal of saving for a vacation
The Change Jar
Make a rule that you never spend loose change or single dollar bills, and at the end of each day, throw it all into a special jar labelled “Vacation” to remind you of your goal. Some people also try imposing rules on their bad habits to encourage saving every time they curse, smoke a cigarette or fail to clean up. It can be very tempting to reach in for a latte every now and then, but do NOT touch your jar for any purpose other than your vacation.
Saving extra cash in a jar is a great way for a family or kids to participate in saving. Once the jar is filled give it to the kids to roll the coins and see how much you have. Some banks do not require you to pre-roll your change so you may bring them your loose coins or you can find a CoinStar counting machines. After it is rolled or counted, deposit the money in your vacation savings account.
Cut Back Your Daily Expenses & Luxuries
Another way to save for a vacation is to cut out some of your small daily expenses and put the money into your vacation savings account. The money you spend on daily luxuries can really add up. If you save the $1 you spend on chocolate bars at work each day, you would save $250 a year (5 days a week x 50 weeks). There are other ways to limit your spending on unnecessary luxuries, for example:
- Save $2-4 on the coffee or latte you buy every morning. Brew coffee at home and bring a travel mug to work instead.
- Pass on eating out or or buying lunch at work. Even if you bring lunch from home 2 or 3 days a week you can save a little more.
- If you don’t have time to make a lunch, try bringing your snacks from home instead of buying from the vending machine.
- Try giving up smoking. Cigarettes are a costly habit and you can save enough money in a year to fund a family vacation – no joke! If you’re smoking a pack a day, you’re spending at least $2000 a year on cigarettes – that number is even greater in regions with high tobacco taxes.
- Cut back on cell phone or cable service extras. Bundle services or ask for a loyalty discount. End pay channels. And shop around for cheaper options.
Sell your junk. Have a big garage sale
A great way to earn some extra income is to sell items you no longer need or use. Many consignment shops will pay you cash for your (still usable) clothes. Used bookstores will buy your unwanted books. Websites such as Craigslist, eBay or Amazon will buy your used CDs, movies and collectibles (minus some advertising or administrative fees). And garage sales are still quite popular and easy to advertise in newspapers, online or with signs in your neighborhood. Get money for your stuff whenever possible!
Time Your Vacation Wisely
Your vacation will be much easier to save for if you plan to take a trip during off-peak seasons when the weather is still decent and accommodations, airfares and rentals are less expensive. You can save up to hundreds of dollars and put your trip within reach much sooner. The off-peak seasons varies by location, so do some research on potential destinations.
Pay With Credit Card Rewards
Use cash-back credit cards or rewards whenever possible. If your credit score is average or better, you might qualify for a credit card that offers free plane tickets, discounts on flights or hotels and cash-back bonuses. Credit cards with travel-related rewards suitable for your destination are a great way to save on your vacation costs.
Review Ongoing Expenses
Try to save money wherever you can – review your insurance policies and loans for extra savings. Speak to your trusted financial advisor, insurance broker and lenders to see if you are eligible for reductions on your premiums or refinancing. And shop around if your current providers can’t offer you better terms.
If you can find a less expensive policy that still provides the level of coverage you want or lower interest rates to lower your payments, you can put the savings, which might be hundreds of dollars going towards your vacation fund instead of into your next bill.
More Than One Way to Save for A Vacation
If you have disposable income, affording a vacation is simply a matter of prioritizing. Make your vacation a financial priority, start saving, pay yourself first and taking a closer look at your expenses ro spending habits to find extra money. Before you know it, you’ll have enough money for your next trip.