Summer vacation costs averaged $1,145 per person in 2013, according to the American Express Spending & Saving Tracker. For a family of four, this totals $4,580—a significant chunk of change no matter what your income level is. If you don’t relish the thought of working a second job in order to afford a week off once a year, you might be wondering if there are better ways to finance your family’s dream vacation. Read on:
Family Vacation Financing Plan – Estimate Your Expenses
The first step to planning a vacation is estimating your expenses. Travel expert Mark Smith recommends using a simplified spreadsheet method to do this. Smith organizes his spreadsheet by date, day of the week and daily activity, and then he breaks down the day’s expenses into travel fare, hotels, food and other expenses. At the bottom of the sheet he adds a section for one-time expenses not tied to a specific date such as guidebooks, visas and insurance. Don’t forget to include a budget for souvenirs and emergency expenses.
To assist you with estimating costs, use such resources as travel guides, travel agents, mobile apps and your own online research.
Look for Cost-Cutting Opportunities
You may be able to lower your expenses considerably by exploring some creative cost-cutting methods. For example:
- TripAdvisor offers a search tool to find vacation rentals instead of expensive hotel rooms
- Travel writer Kaeli Conforti outlines a variety of strategies for cutting travel expenses, such as house-sitting, teaching English, participating in work-exchange programs, volunteering, and racking up enough credit card rewards points to “travel hack”
- National Geographic suggests 57 ways to lower travel costs, such as traveling during off-season, buying winter holiday vacation packages early in August and joining AAA to receive deep discount opportunities
Set a Budget & Open a Vacation Savings Account
Next, open a savings account specially for your trip and factor your contributions to it into your budget. Financial whiz Elizabeth Warren recommends you put 20 percent of your monthly budget toward savings goals and debt repayment, 50 percent for necessary expenses and 30 percent for discretionary items. A portion of your savings budget can go toward saving for your vacation, and you can divert some of your discretionary spending for this purpose, too.
Look for other ways you could increase your vacation fund. For example, hold a yard sale and put the profits toward your vacation savings. If you receive regular payments from an annuity, you may be able to sell your future annuity payments for a lump sum of cash now. You could then use the money to help fund your trip.
You can save toward your vacation faster if you use a high-interest account to store your money. Travel expert Nora Dunn recommends concentrating your travel savings in an online high-interest savings account. DailyMarkets personal finance writer Ivan Daniel suggests getting a good travel credit card as another way to save for your vacation.
About the Author: Ruth Flores is a writer, traveler, and serial redecorator.