I love vacations, they are not only wonderful; they’re essential. My ideal vacation is sitting on the beach with a coconut in hand, listening to island music and eating jerk chicken. Sounds exciting right? It sure does! Have you ever considered a vacation savings plan?
Vacation allows your soul to just relax and rejuvenate. But nothing will spoil a relaxing vacation like having to pay for it after the fact. In other words, going into debt for a vacation is not an ideal situation. Instead, you should save up and pay cash.
We are already in the swing of summer, but you might be dreaming of an escape to a warm beach or a spring break getaway. No matter where you decide to go or the date you have in mind now is a great time to start putting money aside for your next vacation.
So, in this post, I’m going to show you how to create a vacation savings plan for your next getaway to avoid any kind of relaxation-ruining debt.
Step 1: Open a Vacation Savings Account
One of the first things you will need to do before your next vacation is a savings account. If you want to save enough money for a vacation you’re going to need a place to put it. Opening a savings account that is out of sight and out of mind.
This account is only used for vacation-related expenses and should be kept separate from your everyday bank, this will reduce your temptation to use that money. I also recommend a high-yield savings account, your money might even grow a bit while you’re looking forward to your trip.
Additionally, be sure to open an account with a low minimum balance. You don’t want to have to maintain a $500 minimum in an account that’s going to be used up at least twice per year.
Step 2: Make It Automatic
To make saving easier, I suggest setting automatic bank transfers to your new vacation account either once a month or on every payday. This lessens the chance of you forgetting to save and allows you to “set it and forget it.”
Step 3: Set a Savings Goal
A vacation saving goal is important in understanding where you can go and how much you should or will have available. In other words, fit your vacation to your budget, not your budget to your vacation i.e. pick a vacation that fits within that number.
In setting your savings goal it is recommended to pick a number that is between 2% and 5% of your gross annual household income. So, if your gross household income is $75,000, your vacation savings goal should be between $1500 and $3750.
Step 4: Work Your Budget
Saving for a vacation takes a lot, and it can be stressful, knowing where that money is coming from makes it so much easier to plan for it. Take some time to go through your budget to see if there are any expenses you can reduce or eliminate and replace with vacation savings? Are there any areas in your financial life you can cut back on, in order to fund your vacations?
Here are a few examples of area you can come back on:
- Eliminate monthly subscriptions
- Trim your grocery budget
- Reduce your internet speed and lower your bill
- Cut your cable
- Cut back on dining out
Get the entire family on board when looking for a way to cut back. When everyone is on board it makes it easier to explain why the family is cutting back on dining out or why we have two subscriptions instead of three.
Step 5: Make Extra Money
Ok, so you’ve done just about everything in your power to cut expenses and save. But there’s one more approach you can take… make some extra money.
If you want to save for your next vacation, a couple hundred extra bucks each month can make a huge difference. And there are tons of different things you can do to make that amount of money each month.
I mean seriously, an extra $250 every month translates into $3,000 per year, which would contribute to that much-needed vacation.
The average American feels desperately vacation-deprived, especially within the last year. It’s time to take matters into your own hands and start saving for your next vacation. It’s more than possible to take 2 vacations every year.
Who doesn’t want to be relaxing on a beach, listening to Bob Marley or exploring a mountainside, or taking in the culture of another country. It’s all possible with a vacation savings plan, but only you can make it happen. With a little bit of planning here and a bit of effort like a vacation savings plan, you can be on that well-needed vacation without being in debt.
What are some of the ways you plan for your next vacation?