Daydreaming about sandy beaches or snowy slopes? No matter the season, there are always enticing places to go for vacation. Planning for that trip can be fun, but actually paying for it is another story.
Properly saving for vacation not only ensures you can actually afford to get away, but also that you’re prepared for any unexpected costs that might occur (which are bad enough when you’re not on vacay). While there are plenty of solid ways to save for a vacation, here are 3 tips to make the process easier.
Get an app to assist
There are several mobile applications on the market that help you save. Consider ones that allow you to enable automatic deposits or ones that round up your purchases and save the extra change. Examples include Acorns, Stash, Robinhood and M1 Finance.
For this to be effective, start several months in advance, allowing enough time for accumulation. If you’re only saving small sums of money, starting a week before you leave is not going to yield results. Once the time comes to leave or purchase airplane tickets, transfer your tucked-away money into your account and spend away.
Sink before you swim
Next on the list is to create a sinking fund. A sinking fund is not necessarily part of your budget, but a fund where you store extra money from time to time to be used at a later date. The nice thing about a sinking fund is that it gives you the flexibility to deposit when you can. Also, should an emergency arise prior to your vacation, the money is readily available.
When building your sinking fund, ensure you have enough to cover the cost of the vacation and beyond. Odds are you’ll purchase knickknacks and keepsakes on your vacation. Don’t let those purchases put you in a pickle, ruining your perfect vacation.
Save separately to avoid spending
Lastly, open a separate savings account that isn’t connected to your debit card. Opening a savings account strictly dedicated to your vacation will allow you to separate spending money from vacation money. Also, depending on how far out your vacation is, you can look into short-term certificates to bump your returns. And it should be an easy process to open another account.
Ensure your vacation account is not connected to a debit card, keeping away from the temptation to spend that money early. Also, you can have recurring deposits into that account, putting your money away before you can spend it.
Saving can seem difficult, but with the right plan in place you can begin to slowly build your vacation fund, one deposit at a time.