Happy Friday friends! Lauren Davidson, a senior at a prestigious university here in Philadelphia, contacted me about sharing an article to build her writing portfolio. I am not one to give space for free, but sometimes the Grinch's heart grows three sizes in one day, and it did this time, so here it is.
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With the
economy finally picking up steam, many families are looking ahead to their
first real family vacation in years, or ever. As the summer season approaches
and plans are finalized, now is the time to get your finances in order so you
can enjoy the time away without worrying about those post-vacation blues. While
there are a number of things you can be doing to get financially prepared for a
great vacation, here are three essential personal finance tips.
Create a Budget and Saving Plan
Trying to
plan and execute a vacation without a full scale budget and savings plan is
certain to lead to disaster – or, at least disappointment. Any financial
endeavor worth pursuing must have a plan in place if you want to realize your
vision. A successful family vacation requires a plan consisting of three steps:
Establish a goal. Any type of vacation
plan is going to have a cost. You need to determine what that cost is and
whether it is reasonable in light of your capacity to save for it. That means
creating a detailed vacation spending plan, complete with time line and
expenses, leaving room for a splurge or two and the unexpected. The last thing
you want is to have to turn to your credit cards to cover your expenses.
Establish a savings goal. Based on the
amount need to fund your complete vacation, you need to establish
a goal for how much money you will need to have in your vacation fund. If
your savings time frame is less than a year, you should expect to earn zero
interest on your savings. So, if your vacation expenses will run $3,000, you
need to calculate how much needs to be saved weekly between now and the start
of your vacation. If your vacation is planned for 25 weeks out, you will need
to save $120 a week.
Find the savings in your household budget.
Saving $120 a week, or around $550 a month can be a tall order for some
families. That is why you need
a household budget. If the goal is important enough, you should be able to
reprioritize spending for a short period of time. Comb through every single
expense in your budget – both essential and non-essential
expenses – to see what can be redirected to savings. You will be surprised
with what you can find. The important thing is to then make your savings
contribution the first expenditure in your budget.
Budgeting
and saving, especially for a short-term goal, can be difficult to manage for
some families, which is why it is recommended that you employ technology to
help you. There are two apps that can be particularly helpful. Mint from Inuit
and You Need a Budget are personal finance apps available on iOS and Android that
let you track and manage your spending and saving in real time. They can also
be instrumental in helping you to pay down debt, which is the next essential
tip to follow.
Pay Down or Refinance Debt
If you have
a large amount of debt, you should consider whether now is a good time to take
a family vacation. Paying off high interest debt should be a top priority for
any family. However, if your debt is manageable and, more importantly, there is
a chance to pay it off or, at the very least, refinance it to lower your
monthly expenses, now would be a good time to put that strategy into action.
Here are some steps to take with your debt right now.
Credit card debt: See if you can find a
0% introductory rate credit card to transfer any high interest credit card
debt. Ideally, you can find a card with at least a 12 month promotional period.
Student debt: While it’s not possible
to pay down student debt in a short period of time, you may have available some
options for lower its cost, either through student loan
consolidation or refinancing.
Mortgage refinancing: With the
likelihood of higher
mortgage rates in the near future, this may be your last chance to lock in
low rates. If you have been considering it, doing so now could lower your
monthly expenses to allow for more savings.
Make it a Family
By making it
a family endeavor, one in which everyone contributes by finding new ways to
save and make money, the vacation will turn out to be a rewarding experience
and much more enjoyable for all. Enlist the kids to organize
a yard sale, or help with selling items on eBay or Craigslist. Putting the
kids in charge of tracking the savings goal will keep them involved and active
in holding everyone accountable.
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What do you do to save money for travel?
Definitely having everybody buy in on the plan is key!
ReplyDeleteI have noticed that the beach is a lot more crowded the last two or three years than the prior ones before that when we are down there in the summer! Vacations are expensive but so worth the experience over material items that collect dust in the house.
ReplyDeleteGreat tips to stay on track! So glad I don't have student loan debt cause I'd never be able to save for travel!
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