Saving for a Vacation

How You Can Save Regularly to Vacation Regularly

It’s happened again. You have that itch; the one that sets in about 3 months after your last vacation. You know it’ll persist becoming increasingly harder to deny unless you break your normal routine and run till you’ve reached the nearest sunshine. Accept it, it’s time to for a vacation.

Unfortunately, most people can’t just up and go. Even those traveling on their credit card rewards and borrowed money have to at some point do some planning.

Ideally, you’d like to vacation in a more financially risk-free way; no lingering debt, no regrets. It may sound like hard work to be able to pay cash for all your vacation expenses, but put these suggestions into motion and you’ll have a healthy savings fund every time the next adventure calls.

How can I save?

If you are living paycheck to paycheck, or already feel stretched trying to contribute to retirement and emergency savings, finding any money for yet another cause may seem impossible. However, motivation is a powerful thing.

Cutting day to day expenses will be much easier knowing with every purchase you say “no” to, you are actually saying “yes” to your vacation.

Keep an eye out for short-term sacrifices that can boost your vacation savings. You may wait longer till you turn on the A/C during the day, or only turn it on when it reaches a certain temperature. You could practice no-spend weeks, where you opt to find free entertainment and only eat food that’s prepared at home instead of splurging on dining out.

Maybe you are willing to put in just an hour extra at work each week to be able to stash something away.

Even the smallest amounts, if properly reallocated will bring you closer to some much-deserved relaxation.

Another trick you can try is readjusting your tax withholding to see more money in your paycheck instead of in your refund. Ask your employer for a W-4 form and increase the number you input. The higher the number, the less will be withheld as the government assumes you need it to provide for your family.

**Be careful not to withhold too little or you’ll owe money come tax time.

When your first paycheck comes at the new withholding rate, calculate the difference and set that aside in your vacation savings fund.

How much should I save?

The cost of your trip obviously depends on many factors, most of which are within your control.

Ask yourself what’s a realistic amount to save? If you are desperate to take off in the next six months, you’re probably looking at a trip under $2,000. In the next three months? Under $1,000.

Adjust the details of your trip accordingly. For something more easily affordable, consider these options:

Find exotic destinations stateside. In a couple weeks, I’ll find myself on the west coast. It’s only 8 hours away so I’ll save on airfare and still get to see waterfalls, tide pools, and enjoy the salty air. Every other state seems to have a treasure – a hidden hot spring, a river canyon, an isolated beach, or a charming hamlet. Find something that excites you and is easily accessible.

Travel during less popular times. While it’s a good tip to vacation during off-seasons such as tropical places in winter, deals can also be found by avoiding any holidays. For example, the prices on airfare drop almost $100 the day after Memorial Day weekend. So, celebrate the holiday in town, and then take off to enjoy the same vacation experience at a fraction of the price.

Go somewhere you are ready for. Not all vacation costs have to do with food, lodging, and transportation. A lot of us also like to spend money on gear and what we will wear. Resist the temptation. If you have backpacking gear, go on an excursion. If you can stick to your old sunnies and swimsuit, by all means, head to the beach. Conversely, don’t choose a destination where purchasing clothes for an opposite climate may add hundreds of dollars to your vacation expense.

Choose a place with plenty of low-cost activities. Outdoor destinations are the prime example. If you head to a national park, you’ll pay for lodging, food, and transportation, but everything else is free. We spent under $400 for our family of three (and one on the way) to stay for three days in Yellowstone National Park where we saw rainbow pools, the geyser, 3+ waterfalls, went hiking, and spent leisurely afternoons lakeside.

Increase your savings timeline. There are going to be places you want to go that aren’t affordable within your timeline. Don’t charge them to credit cards, but also don’t give up on them. You have two options: subdue your craving until you can afford your trip, or build both short and long-term vacation funds. Head on a weekend trip sooner and continue saving for that two week trip to Europe later on.

Once you’ve weighed the possibilities, you can use Nerdwallet’s vacation budget calculator to organize the expenses and figure out your target number.

Where should I put my vacation savings?

Because you will likely need your savings within the next year, there are only so many appropriate places for a vacation savings fund.

Cash Envelope

For some, there’s a psychological boost to savings big bills. When saving for my first car I squeezed every $100, $50, and $20 bill I could from my paycheck, then stashed it in an envelope.

The idea of breaking bills deterred me from spending the money. If you know you aren’t good at staying out of the cookie jar, then this trick may work for you. Because the monetary amounts are set, it may also force you to round up savings to a whole $20 bill vs. only $15.

If you are saving for a long time, or if you are saving a large amount, your money is probably safer in a financial institution where it is out of reach from thieves (including you). Choose a location that would be difficult to get to in your moments of weakness.

Credit Union Savings Account

Opening an account at a credit union is another option. Credit unions typically offer an interest rate higher than (sometimes even double!) big banks. This gives your money the chance to grow beyond what you contribute alone. Depending on your savings goals it could mean an extra $5-$30 (plus) for that vacation.

Most credit unions have online account management, can be linked to external accounts for regular transfers, and can be added to your employer’s direct deposit process.

Certificate of Deposit

If you have 3 or more months to prepare, utilizing certificates of deposit might also be a safe way of saving for a vacation. For instance, you could commit a few hundred dollars to certificate of deposit that lasts 3 months. During those months your money is earning interest. You can also continue to save on your own. When the 3 months is up, you can add what you have been saving to the amount in your certificate deposit and commit it for an additional 3 months. Continuing to do so can help your savings snowball over time.

In this case, timing is your biggest concern. Once you’ve committed your money to the bank for a set amount of time, you are discouraged from withdrawing it early. Doing so comes with the penalty of losing interest. You may find peace of mind knowing your savings is off limits from raiding; just plan well enough to ensure it will be available in time for your vacation.

Online Savings Account

Online savings accounts have quickly become popular. They, too, can be easily managed, linked to other external bank accounts, and enrolled in your company’s direct deposit. However, because online bank services don’t have the same costs as physical banks, they can offer even higher APY (interest) than even credit unions.

Keep in mind, your money will not be quite as accessible. When planning to withdraw your money, give yourself a few extra days for funds to transfer to your main checking account.

Also be sure the online bank you choose is a member of FDIC, meets all other government regulations, and offers standard consumer protections.

How can I stick to my plan?

It doesn’t take much to make your vacation actually happen. Stop letting your mindset be the obstacle in your way.

Set your budget. Set a date. Determine how much you need to save periodically and then make it a habit by either moving that money to savings on the same day every week or month or by setting up an automatic transfer to your savings fund.

If you need the motivation to cut your expenses aggressively or to make it the long haul to your goal, swap netflixing and social media stalking for vacation planning. Print a booklet of sights to see, change your screensaver to an image of your destination, or indulge in just one piece of inspiration like a journal or cubicle knickknack.

With a plan in place, each day that ticks by is one day less you’ve spent merely wishing your vacation into a possibility, and one day more you’ve taken the actions necessary to claim your victory.

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