LEARN THE BASICS
JULY 2022
How to save for your dream vacation
When you’re running errands, paying your monthly bills or knee-deep in work, your dream vacation may seem downright impossible. But it doesn’t have to be that way. You can turn that dream vacation into reality.
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While the itinerary for a vacation may fall into place pretty easily, the finances may need some time. But don’t worry — you’ve got help. Here are four steps to help you kick-start your vacation savings plan.
1. Keep your dream vacation reasonable.
The first step of any journey is to understand your starting point. Your expectations will be different if you’re still building an emergency fund or paying off credit card debt versus if your house is paid off and you’re steadily saving for retirement. Your dream vacation for a given year might be a cool staycation or a quick trip to the beach instead of a Caribbean cruise or a tour of European capitals.
But that’s okay. Remember, the idea is to enjoy a welcome change from your everyday life for a while — not to match your neighbor’s Instagram-perfect adventure that would leave you in debt. Your job is to balance having fun with saving for the future.
2. Plan your vacation with the end in mind.
Once you know your starting point, you need to figure out where you want to be — and how much work it will take to get there. So do a little research into how much your vacation is likely to cost. Then, divide that by the number of months until you plan to take your vacation. Suddenly, you’ll know exactly how much you’ll have to save each month to reach your vacation savings goal.
And don’t forget: Plan for everything. Things always cost more than you expect, so build in a buffer to cover the unexpected stuff. You might think about things like eating out, but don’t forget about things like snacks or movie rentals for rainy days.
3. Create a special fund for your vacation savings.
A vacation is a big purchase, so it makes sense to add a “vacation” line to your budget and figure out how much money you need to set aside each month. Whether you use a physical envelope or SmartDollar®, which includes premium access to the online budget app EveryDollar, it’s the actual act of setting money aside that will make your vacation savings plan work.
Think back to the monthly amount you landed on in the previous step. Put that money aside in your “vacation” account each month and leave it alone. If you let it grow, the cash will be there when your departure date rolls around.
4. Cut some expenses and add some income.
As you build your budget during the upcoming months, look for adjustments that can help your vacation planning. For example, you might find some places where a little trimming could make your savings grow. Or you may come across opportunities to earn some extra income to put toward the trip.
Remember, dream vacations with unlimited budgets don’t just happen. You need to have the financial flexibility to transform a good vacation into a truly unforgettable experience. No one wants to go to Europe and not be able to enjoy its attractions when they get there. Cutting back on some luxuries and making a little extra income now will help you achieve that goal. Additional income may not apply to your situation at all, but it’s something to look for between now and your departure date.
Start your vacation savings plan today!
The earlier you start, the more you can put into your vacation savings account. These four steps will help you have a plan that works. Even more important, the tough work you put in now will help you experience your dream vacation debt-free — instead of living a financial nightmare for months when you return home.
Remember, as a Costco Executive Member, when you book a vacation through Costco Travel, 2% of your purchase goes towards your annual membership award.* In addition, you can earn 3% cash back rewards on Costco Travel purchases made with your Costco Anywhere Visa® Card by Citi.**
*Terms and conditions apply. Annual 2% Reward certificate for Executive Members is sent by Costco at membership renewal. See the membership counter or Costco.com for details.
**Costco Anywhere Visa Card by Citi – Subject to credit approval. Earn 3% cash back rewards on Costco Travel purchases. Additional terms and conditions apply. Ask for details. Cash back will be provided as an annual reward certificate once your February billing statement from Citi closes and is redeemable for cash or merchandise at U.S. Costco warehouses including Puerto Rico, until December 31 of the year issued.
Source: Ramsey Solutions. How to save for your dream vacation.
Where in the world do you want to go? What adventures do you want to experience? The following resource can help you bring your dreams to life.