You look at the calendar and sigh. A dream vacation seems impossible in the middle of bundling kids up for school, shoveling snow, and scraping ice off your car windows.
But it doesn’t have to be that way. You can turn that dream vacation into reality. But you’ve got to start a vacation savings plan now.
Let’s be honest — while the itinerary for a vacation probably falls into place pretty easily, the finances will need some time. Fortunately, time is on your side. Summer is still a few months away, which is why today is the best day to get going.
To help you out, here are six steps to kick-start your vacation savings plan.
The first step of any journey is to understand your starting point. The Baby Step you’re on right now will help you determine what’s possible this summer. For example, if you’re walking through Baby Steps 1 or 2, your expectations need to be different than if you’re in Baby Steps 3 – 7. Your dream vacation for a given year might be looking at a cool staycation or a quick trip to the beach instead of a Caribbean cruise or a tour of European capitals.
But that’s okay. Remember, the idea is to get away from the “normal” for a little while—not to match your broke neighbor’s picture-perfect adventure that’s all over Facebook. Your job is to balance having fun with saving for the future.
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Once you know your starting point, you need to figure out where you want to be—and how much work it will take to get there. So, do a little research into how much your vacation is likely to cost. Then, divide that by the number of months until you’ll head out. Suddenly, you’ll know exactly how much you’ll have to save each month to reach your vacation saving s goal.
And don’t forget Plan for everything. Let’s face it . . . things always cost more than you expect, so build in a buffer to cover the unexpected stuff. You might think about things like eating out, but you might forget about things like snacks for the evenings or movie rentals for rainy days.
Dave always talks about setting up special accounts for big purchases. Well, a vacation falls into that category, so it makes sense to add a “Vacation” budget line. Whether you use a physical envelope or an online budget app like Every Dollar, the actual act of setting money aside is what will make your vacation savings plan work.
Think back to the monthly amount you landed on in the previous step. Put that money aside in your “Vacation” account each month and leave it alone. If you let it grow, the cash will be there for you once summer rolls around.
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As you build your budgets during the upcoming months, look for adjustments that can help your vacation planning. For example, you might find some places where a little trimming could make your savings grow. Or maybe you’ll come across opportunities to earn some extra income to put toward the trip.
Remember, dream vacations with unlimited budgets don’t just happen. No one wants to go to Europe and not be able to do any activities. You need to have the financial flexibility to make a good vacation a truly unbelievable experience. Cutting back on some luxuries and making a little extra income will help you achieve that goal.
Of course, this will vary from person to person. Additional income may not apply to your situation at all, but it’s definitely something to look for between now and your departure date.
While you don’t want to charge your whole vacation onto your credit cards, using credit cards with travel rewards is another story. “One of the easiest ways to afford a summer vacation is by signing up and using a travel rewards credit card for your everyday purchases that you would be making anyway,” Palmer says. “These cards give consumers travel points that can be worth big bucks in a short period of time. NerdWallet’s 2018 Travel Study found that Americans who sign up for a travel credit card get, on average, $901 in free flights and hotels in just the first year of having the card. That’s a ton of money that many Americans might struggle to set aside specifically for a vacation, and it could make the difference between staying home this summer or taking that dream vacation.”
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“I have a Chase United card that gives me one air mile for every dollar I spend. After letting your miles accumulate, you can pay for flights in full (17,500 miles gives you a free national flight, and 30,000 miles gives you a free international flight). Since I’m a frequent traveler—and since I’m good about paying my credit card bill every month—this works really well for me.” —Alexa Johnson, 26, a PR manager at a travel and tourism bureau who takes four or five trips each year
“I try to put miles I’ve saved toward multiple economy flights, instead of one, more expensive first-class flight.” —Kim Kessler, 43, a PR representative who spends about five months each year traveling
Start Your Vacation Savings Plan Today!
We’ll say it again . . . the key to saving for a vacation is having a plan. And the earlier you start, the more you can put into your plan.
These six steps will help you have a vacation savings plan that works. Even more important, the tough work you put in now will help you experience your dream vacation debt – free—instead of reliving a financial nightmare for months when you come home.