Ah, vacation. After the last 18 months, even the idea of planning a getaway can be exciting. Not to mention, we all deserve to catch up on some relaxation.
But whether you’re looking to jet-set to an international destination, take a road trip, or relax at a resort, travel is expensive. While the price of a trip shouldn’t halt your plans, you may need to save up beforehand.
It’s a smart idea to set aside more money than you expect to spend. You never truly know what may happen on your excursion, and you should always be prepared for unforeseen circumstances.
Ready to take off? Here are three tips to get your finances on track so you can be in vacation paradise in no time.
Make Your Debit Card Your BFF
Do you select your credit or debit card? You’re about to make a purchase and pull out your wallet. Your credit card may be more tempting — after all, you won’t see the bill until later in the month. On the other hand, you don’t have to think about the payment again with your debit card.
When you’re in a saver’s mindset, budgeting with a debit card is one of the easiest ways to start saving. Credit cards can be deceiving. Credit card companies’ incentives to entice new cardholders can lead to more costs and commitments down the line.
Debit cards create better long-term spending habits. They limit use to the funds you currently have available, so you’re never in a position of overspending. And they allow you to quickly bucket where your money is going.
Debit cards also don’t typically require extensive application processes. As long as you have a checking account, you can open a debit card account with minimal effort.
Unlike credit cards, the fees associated with debit cards are minimal or nonexistent. Credit cards can come with hidden fees such as late fees, annual fees, and interest charges. Moreover, research shows that credit card users are willing to spend up to 100% more using a credit card than alternative payment methods. So not only is using a debit card easier, but it’s also better for you and your future savings.
Track All Your Spending
It’s easy to track the bigger purchases, such as your monthly rent payment or cell phone bill. Saving, however, can often be accomplished by eliminating frivolous daily purchases. Remember the bottle of water you bought from the convenience store while you were running errands? Or that travel app you purchased and downloaded on your commute home? Those things add up.
Fortunately, you can use tools and trackers to get a better sense of your spending habits. Some apps track your expenses by spending category. They can provide you with an overview of all your money, including cash, investments, and bills.
Other budget apps provide a snapshot of your spending, allowing you to quickly see what you can spend each day. Find one that works for your needs.
If you don’t want to commit to another app on your phone, a paper and pencil work just as well. Jot down everything you purchased — even the littlest things — each day for a week. Bucket the items by category, such as “Groceries,” “Clothes,” “Restaurants,” etc., and see what’s costing you the most money each month. No matter what tool you use or discover, breaking down your spending areas can help set yourself up for saving success.
Watch Your Savings Add Up in a Vacation Bank Account
Now that you know what you’re spending on, it’s time to start saving. Remember the coins you used to save growing up as a kid and add to your piggy bank? That’s exactly the routine you’re going to get into again by setting up a vacation bank account.
Financial institutions often allow you to create a separate savings account and name it based on your goal. Pick a specific name such as “Family Beach Trip 2021” or “NYC Girls Weekend Getaway.” Seeing an exact name can create further incentive to help you save up.
Next comes the actual saving part. Automatically deposit a certain amount each week or month into this vacation bank account. Work with HR to set up an electronic deposit into selected accounts (including your vacation account). Not seeing the money in the 1s place will help keep you on track with your goals.
Another thing to consider is your subscription services. The average American spends $47 each month on video subscription services alone! Look and see if any can be cancelled or paused for a few months.
You may end up finding another free alternative, or better yet, realizing you don’t miss it. Take the money you were spending on subscription services and automatically apply it to your new vacation bank account.
Your dream vacation is in sight; you just need to get there. Saving for a big vacation may seem daunting. However, taking it the first step at a time and making conscious spending — and saving — decisions can have you jetting off before you know it. Bon, voyage!