Planning a guilt-free vacation is like exercising to stay fit and healthy so that you can indulge yourself in eating anything you want without having to worry about gaining weight since you deserve a reward. Wouldn’t that be awesome? You won’t even feel any guilt after! There are many ways to stay fit and eat whatever you want but right now we‘ll be talking about how to pre-fund your next guilt-free vacation.
Think of it this way, you work hard to gain a lot of wealth and then just go on a well-deserved vacation without worrying about your wealth declining and staying financially healthy. Ready? It is time to pack those bags, book those tickets and get ready to travel without the baggage of worries.
Before everything else, you need to know where you are headed. It may be a local trip or somewhere outside the country. A staycation in a five-star hotel or beach resort could be great time. Or going on an adventure with your significant other or with the whole family.
Next, add up all the expenses related to the planned trip. Travel expenses, hotels, food, planned activities, etc. Everything you can think of! Better to be safe than sorry, right? Don’t worry about how you’ll to come up with the amount just yet. We’ll get there. Lastly, don’t forget about how you are going to leave things at home (e.g. getting someone to look after your pets, hiring someone to look after your home, etc.)
Whether you’re planning to take a vacation in a few months or next year, below are some tips to help you save and make that vacation happen.
Budget, Cut, Save
Budgeting given your income and expenses, as well as setting aside some cash for your planned vacation may be difficult but not impossible. Whether you use a budgeting software application or manually create a budget, start by figuring out how much you usually earn, how much you spend and how much will you be able to save. This will give you an overview of how you can pre-fund your dream vacation. Most of the time, people budget their finances starting with income minus expenses. What’s left would be your savings but sometimes, nothing is left to save due to a large allocation to expenses.
One of the best and simplest ways to budget is to start with income minus savings (the amount you want to save) and then allocate what’s left for expenses. In this way, you can properly focus on what expenses are absolutely necessary for you since you are left with a predefined limited amount. In this scenario you won’t even have to worry about savings since it’s the very first thing you budgeted for.
A money jar, piggy bank or saving account are simple ways to set money aside. However, there are other good and traditional saving guidelines that may be used. One would be the 50/30/20 Rule – This rule puts fifty percent of your income to necessities, like housing and bills; thirty percent to entertainment and your other wants. Lastly, twenty percent will be for your financial goals, like paying off debt, saving and planning for retirement. Though this kind of rule may come with variations, allocation to each bucket really depends on you.
The 80/20 rule may suit you better; twenty percent to save and eighty percent on everything else. While these rules may work for some people with simple financial structures, it may not apply to someone with a complex financial situation with constantly changing needs and wants. With a complex financial structure, it is best to have a financial planner on your side, which will give better odds in growing that vacation account.
Set aside a vacation account
Another way to pre-fund your vacation is to have an account that will have regularly recurring money transfers into it for the purpose of funding your trip. In this way, you will be able to dedicate a fixed amount towards your vacation periodically. With this, you may reach your goal before you know it. Financial institutions offer different and flexible accounts that make recurring transfers easy and help you save towards your financial goals with minimum or even no maintenance costs. Separate accounts can also be chosen if you have several goals on your list.
Invest your savings
Just saving is not enough since the process is slow. In addition to saving and budgeting for your next vacation, you need to put your money to work in order for your savings to grow to the amount of the estimated cost of your trip. You may want to invest in liquid assets with stable prices since a vacation trip is usually a short-term goal. For a more detailed of list of asset ideas, check out our previous article on 6 Assets Financially Successful People Invest In.
Talk to a Financial Planner
There are many reasons for talking to a financial planner. To fully maximize your wealth potential, financial planners develop strategies designed to meet your specific investment goals, time horizons, liquidity needs, and risk profile.
Financial plans may be created for different purposes. Some are specifically for retirement planning, education funding, marriage or divorce planning, tax planning or purely asset management. With regards to pre-funding your vacation, a financial planner would be of great help. A financial planner would help you understand your financial position better and guide you in reaching that vacation funding goal. Click here on how to find the perfect financial planner for you!
BONUS: Utilize a travel agent
If there is someone who can find the best deals and offers on your next vacation destination, it’s your travel agent. A travel agent can suggest and provide options and travel to-do lists for your trip, giving you a more efficient way of spending your money with all the promos and deals they may offer. What’s better is that after mapping and planning your vacation, your travel agent can point out things you may have missed.
Relax, relax, and relax!
Remember that you work hard and it’s time to go and reward yourself with a well-deserved vacation. You have filled your life with milestones and your next stop is that adventure or vacation you’ve always dreamed of! Yes, we need to work, yet we also need to take some time off and experience a vacation. It greatly reduces stress and helps you see things more clearly. It also does your health a lot of good, makes you happier and offers you more alone time or a stronger bond with family and friends. Lastly, you definitely deserve to relax no matter how busy you are. Now, go and make that dream vacation a reality!