How to save for your next vacation

Written by Janine Rogan

Monday, June 18th, 2018

The nice weather is here and summer vacation is just around the corner. Every year around this time, I find myself feeling the itch to travel. Sometimes it's a desire to go somewhere halfway across the world, while other times I'd rather stay close to home. A vacation is a chance to escape the daily grind and relax for a while, and although I do enjoy getting away once a year, it's important to be prepared financially.

Vacations can be expensive. There are flights, hotel rooms, food and activities to consider. The costs add up quickly, and if ill-prepared, you can find yourself in the red in a hurry. Saving up for your next getaway ahead of time can seem like a daunting task, but if your entire vacation is spent worrying about how you're going to pay it off, then what's the point? Here's how you can budget for your next vacation so you can concentrate on enjoying yourself.

Identifying your vacation costs

Before you can even start saving for your trip, it's important to research and figure out what the vacation will cost. There's travel and hotels, but don't forget small daily expenses like cabs or snacks. You may also need to plan around potential lost income from taking time off, depending on your employment. (For example, if you're a freelance worker.)

Figure out what you need to save each month

If you know you want to jet off on vacation in 8 months, you'll want to get saving! Take the amount you'll need to save (for example: $3,000) and divide it by the number of months you have to save ($3,000/8 = $375 per month). Breaking it up into smaller chunks makes saving this large amount of money a more feasible task. You may even want to consider breaking it up into even smaller chunks by setting aside money biweekly.

Make it automatic

It's a simple and effective way to save. Set up an automatic transfer of money to your savings account on your paydays, or perhaps only once a month. My husband and I have set up a $250 transfer from each pay period that automatically goes into a travel savings account. We end up not even thinking about the transfer until after it's happened, and we're always pleasantly surprised when we log in to check our savings progress.

Find a credit card that can help

If travelling is important to you, then consider a credit card that offers travel benefits. For years, we used a credit card that accumulated travel points. We could redeem these points as a dollar value against flights and hotels. A few months ago, we decided to switch to a cash back card that deposits the money directly into our savings account. We've chosen to have the cash back go into our travel savings account. It gets us that much closer to our next trip.

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