Vacation Planning: A Quick Tutorial

If you’re like me, you probably need time to reset each year. With spring and summer fast approaching, you may find yourself wishing for a change of scenery. Thankfully the new house has delayed or reset that timer a bit for our household – I’m still learning my new routines- but, eventually the time will come when we’re stir crazy again. 

Along the same lines, a common question I get from clients is “How do we travel without worrying about $$$?” The answer is simple, make the travel cost part of your savings plan every month! Then you get to take vacations, spend the money, and only worry about having fun!

Let’s Vacation Plan (Financially Speaking)

Start with “How many trips do we want to take every year?”

Then, plan out your next three or four trip ideas. Ask:

How much do flights cost? 

How much will it cost to stay there?

How much do activities cost?

How much do we need to spend on food? 

Let’s say you do that for three trips. One costs $3,600 total. The second costs $4,800 total. The third and final trip would be epic, like a honeymoon, so it would cost $10,600. You then can make a few decisions about your plan for savings. 

You could average the costs and save that as a monthly amount. Add up those values and divide by the number of trips, you get an average of $6,333.33 per year. That’s pretty close to $525 per month you would need to set aside as a household. You would end up oversaving in the lower cost trip years, but it’ll help you save more for the big trips!

You could also exclude the biggest trip. If you only averaged the first two trips, you would need to save $4,200 per year or $350 per month. This is a more affordable savings option, but would mean you need to hold onto your savings for a few years to take an epic trip.

Finally, if you have the extra income and travel is really important, you could save a multiple of the average to make sure you can take a few trips per year. For a lot of individuals, couples, or families this isn’t a realistic option. However, if you have the resources to do so it’s still great to plan!

Wrapping Up

In our household, we’re in the early stages of planning a trip to Disney World using this method. My fiancé’s never been! We also have a wedding and a honeymoon to save for, so there’s plenty tugging on our resources. That said, by actually doing the math and knowing what your costs look like we’ll hopefully be able to make it all happen.

The important thing is by setting aside the cost of your vacations ahead of time you won’t be paying credit card interest for your fun. You simply spend the money you’ve saved on the thing you saved it for, which can be joyous! Future you- and your financial planner- will thank you.

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