We all need a break, but are we taking them? Tips to afford your much-needed vacation
We all need a break. But are we taking them?
Americans leave a total of 705 million vacation days unused each year. And millennials are the worst culprits, taking the least amount of vacation compared to their peers.
Turns out, this same study reported that taking a vacation (traveling, specifically) increases your chances of getting a promotion. And, no surprise here, it increases your happiness.
Perhaps you've put your vacation on pause because of finances. We'll help you create a travel budget so you can save for vacation while still paying off debt, saving for retirement, and doing all you need to do to keep your financial plan in order.
So, let’s get vacay-budget-planning already?!
What to have saved before investing in vacation planning
Before you begin saving money to your vacation fund, make sure you have enough in your emergency fund. We recommend trying to have at least two-months of living expenses in this reserve. This way you will have money set aside for in case any unexpected events occur like getting laid off from work or having your car break down.
You should also aim to have paid off any high-interest debt. Because you shouldn’t have to worry about your debt piling up while trying to eat your way through Italy on your dream vacation.
And, of course, we recommend you have your retirement savings plan set up. After all, that plate of homemade spaghetti and meatballs deserves your full attention!
Opening a vacation savings account
Once you have enough saved for emergencies, consider opening up a new savings account for travel. This way you can avoid accidentally taking money away from your vacation fund.
Talk to your financial institution to see if they have a low- or no-fee account with a high interest rate. From there, you can set up an automatic payment or direct deposit to the account. This way, part of your paycheck will go to your vacation fund without you even having to lift a finger. Using this method can also help reduce the temptation of taking money out of your fund later on. (We also strongly recommend having these kinds of things set up for your retirement savings and your investments.)
Consider a travel-related credit card
In the market for a credit card? You may want to consider signing up for a credit card that offers travel rewards points. Or, if the card offers cash back, consider putting that cash into your travel fund (of course, after your debt, retirement and investment needs are met!) Bottom line: do your research and find out which card checks the most boxes for you.
Keep in mind that, while building credit is incredibly important and using a credit card responsibly is a great way to do that, you want to make sure you have a debt elimination plan in place. We do not recommend racking up credit card debt—the interest rates are terrible!
Tips to create a travel budget
Now that you've set a plan for your retirement, debt, and investments and you've considered ways to grow your money in your vacation savings, let's find ways to trim your spending. That way, the money you're saving can bump up your travel fund!
It's time to crack open your budget and get a sense of what you could shift. Maybe your “entertainment” budget could be a little leaner. Or, maybe your Amazon spending could use a closer look. Taking small steps in your daily routine and making small changes to your spending habits can make a big difference.
Don’t worry! Before you hack away at your precious budget, consider the small, yet powerful ways you can save money for your trip.
Skip the latte.
Sure, $5 for a coffee is reasonable every now and then. But in aggregate? One cup of craft coffee for each work day in one year sets you back $1,305. That’s a flight to Paris! Make that cup o’ Joe at home—hey, you can even add all the extra fixin’s you like!
Don’t eat out, opt in.
Instead of that breakfast sandwich or drinks out with the group, consider putting that money aside for your travel fund. Or, order a less expensive option and put the remainder of what you would have spent in your travel fund.
Cut the cord.
Still using cable? Yeah, so is our grandma. (Kidding! She’s already on Netflix.) Consider switching your pricey cable subscription to a streaming service. If you can’t live without GoT reruns, you can always purchase premium channels a la carte and still weigh in for less than your old cable bill.
Hype up your home workout.
You don’t need a fancy gym membership to stay/get in shape! Cancel your club memberships, because YouTube is your new best friend. Consider free workouts from money-saving fitness pals online. Or if exercise videos aren’t your thing try going for a hike outside or run around the neighborhood.
Buy in bulk.
Welcome to #adulting. That Costco membership isn’t only a rite of passage to adulthood, it’s a way to save major cashola. And hey they have free samples and 1 dollar churros. It’s a win-win!
Couponing...for the next generation.
Digital coupon resources and apps will help you benefit from the coupon savings without actually having to physically cut out coupons. Come on, it's not 1994, #amirite?! Just get the free app or plug-in and shop away. No scissors or weird accordion folders necessary. Welcome to the future of saving money.
Reassess your insurance.
When was the last time you checked your home and auto insurance plans? It’s good to check in at least once every three years to ensure you have the proper coverage for the right price.
Buy second hand.
Are you in need of a new living room couch? Well before you drive over to your closest Ikea to look at sectionals, think about buying second hand. You can check out Facebook marketplace and see if any listings catch your eye or go to nearby estate sale. Buying furniture second hand cannot only save you hundreds of dollars but you can also find some super unique pieces for your home.
Tax returns, birthday checks and bonuses oh my!
Did you just receive your annual tax rebate or get some checks as a Hanukkah present? Stop right there! Put your credit card away. You do not need to buy those new Nike sneakers. Instead use this “extra cash” in your vacation fund!
Now that you have a better idea of what it will look like to trim your budget, whip out your current plan and start making some changes. Every dollar and skipped latte counts. Before you know it, your vacay fund will be brimming with cash ready to take you to paradise.
Remember: planning a budget-friendly vacation that’s stress-free is easy. The key is to plan ahead.
Great news! The Pocketnest app is now available! Download Pocketnest and get your finances in order—in just 3 minutes a week! No jargony finance-speak, pricey fees or in-person meetings required.