Saving for a vacation is really not a heck of a lot different than saving for any big purchase—be it a new car, a wedding, or a home of your own. You want to be focused now so that you can find time to reduce stress while on holiday. It takes discipline to accomplish the first and most important principle of saving for anything: managing to spend a little less than you earn.
How to save up for a vacation
Do you have what it takes to save for a vacation? Of course you do! A little financial discipline will take you far.
1. Take a step back
Saving for a vacation requires you to pause, step back, and study your monthly purchases all at one time. Take a good hard look at both your chequing account and credit card statements. And go even deeper by inspecting your grocery store receipts. Look at that handwritten bill of sale from the general store (19th-century readers only). The point is: get a big-and small picture sense of how you spend your money so you can start immediately implementing some money-saving habits.
2. Select expenses you can cut back on
A close look at your statements will likely identify lots of stuff you don't need, automatically renewing subscriptions you don't really use anymore, visits to establishments that might not have seemed expensive at the time, but really add up. Inevitably, you’ll start seeing patterns in your spending and those patterns will reveal lots of ways to save money, starting right now. Congratulations, you’re a financial analyst! Take a good look at your bank account and get rid of anything that doesn't bring you pure joy! Looking for some inspiration? You've come to the right place.
Cut the cable cord.
Pretend all fancy coffee shop floors are made of hot lava and brew your coffee at home.
Learn to love generic brands over expensive designer brands.
Renegotiate cell phone contracts. You'd be surprised how much companies will be willing to bend to keep your business.
3. Open a dedicated wedding savings account.
Once you’ve become a savings Jedi, you’ll want to make sure that you segregate your vacation savings in a separate account so that you don’t accidentally blow all your wedding money on a spur of the moment $1,000 tasting menu
Be smart when planning your vacation
You know what’s a heck of a lot easier than saving for a super deluxe, off the hook expensive vacation? Saving for a super deluxe, off-the-hook reasonable vacation. There’s a whole corner of the internet devoted to Scrooging out on vacation expenses, including:
Find destinations with favorable exchange rates.
Sign up for cheap flight newsletters and set price alerts.
Surf the web in “incognito” mode so that brainy travel sites don’t know you’re in the market to buy (and overcharge you.)
How much will you need to put away to finance your vacation?
Here’s a revolutionary concept: why not pay for the entire vacation in cash? Imagine how much better you’d feel sipping a pina colada knowing that when you get home, you won’t have to spend the next years working to service the debt on six ounces of pineapple juice and two ounces of rum.
It’s easy to plot for a cash vacation. Just compute the total estimated cost of the trip, count how many months are left until departure or flight purchase and divide the cost by the number of months. Then, enjoy the most relaxing, debt-free vacation you could have devised for yourself.
