It’s 5 o’clock somewhere: 5 tips when saving for vacation
You may have multiple savings goals and as your priorities change, it is good to know how best to save for the things that matter most, without sacrificing your own financial future. Here are five tips to help you save for your next vacation.
Fund your wanderlust
You know you want to get away to somewhere amazing and affordable. Once you decide on your destination, you will want to look at all vacation expenses, everything from airfare to tips. On average, Americans spend 10% of their annual income on vacations and a quarter of respondents even said they spend 15% or more¹. Once you have all of your expenses sorted, be sure to incorporate the cost into an existing budget, figure your timeline and then set your savings goals. Once you prioritize what is important, it is easier to forgo spending too much on fun now to fund your wonderful wanderlust later.
Save now, play later
It is tempting to indulge and give into instant gratification. A little indulging is OK but remember all good things, including saving for vacation take time. The people who achieve their savings goals sooner, forgo fun now so they can play more later.
Use credit rewards to your advantage
Many credit cards and even some debit cards, offer travel points and cash back rewards on certain purchases. Instead of paying cash, think about paying with a rewards card and earn points. Make sure to shop around and compare for the best rates and the best travel options. Be sure to keep an eye on your expenses and pay as much as you can as soon as you can to avoid interest charges. Take advantage of rewards programs and earn more points so you can enjoy saving more when you plan your trip.
Create a vacation fund
To make sure you save specifically for your vacation, there are a few creative ways to make it happen. If you are getting married or are having a birthday, you can register for a vacation or honeymoon and ask guests or friends to contribute to your registry instead of receiving gifts. Another way is to open a separate vacation account. Then, you can automate the savings process by setting up a specific amount for recurring transfers on payday so you can reach your priority goals, helping you to stay on track and plan your vacation sooner!
Bank your bonus
Another way to save more for vacation is to earn more. If you get a tax refund, a raise or a bonus, make sure when other important expenses are paid off, place some into your vacation savings. If you have other competing goals, adhere to a balanced 50/30/20 rule. This is when you apply 50% of your earnings to living expenses, 30% to savings, investments and debt, and the last 20% for fun. You’ve worked hard, now save more of what you’ve earned to pay for a much-deserved vacation.
Remember, building savings takes time. As you look for more ways to save for your next vacation, be sure to budget for all of your competing savings goals. Save early and save often, so you can provide for your loved ones, and live the life you’ve envisioned.