Do you dream of going somewhere exciting in a far away land? Perhaps you crave adventure in strange and exotic lands. Perhaps you dream of romance and sophistication in Paris or Venice. Maybe you’re interested in exploring your heritage in whatever old country (or countries) your ancestors left behind. Then again, the sunshine and peaceful island lifestyle of your favorite Caribbean island might be calling you. Whatever it is that floats your boat, you would dearly love to spend your next vacation there, out of the country and far away from your daily life. The only problem is affording it. Somehow or other, you just never seem to have quite enough cash to manage. Well, I’m here to tell you today that you can change that. All you have to do is start saving. It isn’t impossible for you at all! You just need a few pointers to get you headed in the right direction.
Decide where you want to go and when. List all the relevant details, such as how you want to get there (airplane?), what you want to do while you are there (backpacking and hiking up volcanoes, or attending fashion shows and buying perfumes?), roughly where you wish to stay (5-star hotels or youth hostels?). Dream a lot, until you’ve formed the perfect vacation in your head. Now research all that stuff and find out how much it will cost. (If your dreams are bigger than Donald Trump’s annual salary, make adjustments to the real world as necessary.) Once you have your plan and your dollar figure, you now have your goal.
Your goal is a specific dollar figure and a specific date. Your mission, should you choose to accept it, is to accumulate that much cash in your savings account by that date.
Open a Vacation Savings Account
Commit to your goal by opening a special savings account just for this vacation. If you just lump in your attempts at savings with your regular money, you will probably wind up spending it. Likewise, if you throw your “earmarked” savings into the same account with “other” savings, it will soon become unclear what is vacation money and what is other money. It absolutely needs to be in a separate pot.
Research various savings options to find what works best for you. Don’t rely on what you think you know, as many banks change the terms for possible new accounts all the time. If the account you choose has a minimum balance to avoid fees, make sure you open the account with that minimum balance! Fees suck away your savings and make it harder to save!
Subdivide Your Goal
Some dream vacations are more expensive than others, and people have different financial situations resulting in different tolerances for expense. Nevertheless, if you already had that much money lying around, you wouldn’t be reading this article.
Count up the number of months between the date you begin your savings plan and the date you want to have accomplished your goal. This is the amount of time, in monthly units, you have in order to fulfill your goal successfully. For a lovely June vacation, if you start saving in January (i.e., right after Christmas expenses end – an excellent time to begin), you will have six months to save.
Divide your total goal by the number of months you have. This number is the amount you need to add to your vacation account each month in order to reach your total goal and have your dream vacation. This number should seem more manageable than looking at the total amount you need.
If you add this much each month without fail, you will have your dream vacation when you want it. It’s that simple.
Treat Your Vacation Savings Account Like a Bill
Your goal isn’t going to magically accumulate itself. You need to add money to the vacation pot in order for it to grow. (Yes, there will be some interest, but not enough to get you to China this year.) If you treat this as optional, or as a parking lot for any extra change you have at month’s end, you will not meet your goal on time. In order to ensure that you meet your goal, you must pay money into the fund as if it were a bill.
You can set up automatic transfers from one account to another that happen on a regular schedule. Alternatively, you can simply pay your fund when you pay your other bills for the month or the pay period.
Decide how often you will pay your “vacation savings account bill” – weekly, every two weeks, twice a month, or monthly – and calculate how much you need to pay each time in order to meet your savings goals. For monthly, you already have that figure. For twice monthly, divide that number in half. For weekly or every other week, you need to count weeks and divide from the original total number. (However, that said, if you divide a monthly total by four weeks, you will sometimes pay five times in a month, which will result in what seems like “extra” money at the finish line, when you magically have more money than you set out to save. This is a nifty trick for over-achievers.)
Find Money to Afford Your Vacation Savings Bill
Obviously, in order to pay your vacation savings account, you have to have the money to do so. It’s no fun to lose electricity or get evicted because you were saving for a vacation.
Generally, this money (or at least a good portion of it) should come out of your discretionary income. This means that you will have to make some sacrifices in your lifestyle now, in order to have your vacation later. After all, if you weren’t spending that money currently, then you would already have accumulated a pile of money you could just up and use. Look at your lifestyle and decide where to make cuts. For example, if you see two movies a week in the theater, then maybe cutting back to one would handily deposit $30 or so (assuming you and your companion get overpriced snacks with your movie) each week. Or, if you drink a lot of soda, give plain water a try. If you shop for new clothes often, simply reduce your monthly shopping budget. Essentially, you are reclaiming money you already have, and putting it to a more noble use. Be strong and your vacation dreams will come true.
If making cuts in your lifestyle can’t fund your vacation, then you must find more income. Ask for overtime at work, do some babysitting, do some freelancing or consulting on the side, seek a part-time second job, teach a class, do tutoring, clean houses, or take on various odd jobs around other people’s houses. Use every penny of your extra income to pay into your nefarious savings schemes.
If it feels hard, just close your eyes and imagine how great your ultimate vacation is going to be.