What dream getaway is there?
Perhaps it's sipping mai tais while lounging on the beach and watching the sun set. Or perhaps you're feeling a little more daring and would prefer to rent a vehicle and explore Iceland's Ring Road.
Whatever your preferred type of vacation, you can count on spending a lot of money on it. Fortunately, savings accounts are designed for just that. But how much money should you save aside for a trip? And how can you save the most money?
We'll explain how to make your own DIY savings plan to provide the answers to these concerns so that wherever your wanderlust leads you, you'll have enough money in your bank account to go there and back.
Step 1: Establish a Target Savings Goal
It is simple to make an educated guess and grab a random number out of thin air to use as your target savings goal. You might run out of money before your vacation is over, so it's also one that could leave you unsatisfied. Nothing is worse than being stranded in a breathtakingly beautiful foreign country with no money to do anything.
Instead, take the following tack:
Add Up the Cost of Your Vacation
You'll need to do some research for this, but isn't looking into all the possibilities part of the fun?
Spend some time totaling the costs of the following items for the duration of your vacation in particular:
- A round-trip flight
- Hotel
- Food
- Souvenirs
- Costs of travel, tours, and entry
Step 2: Put Together a Working Savings Plan
Great, you now have a target in mind. What do you do next? Of sure, make a savings plan.
This is how you do it:
Add up the number of months till your departure date for your vacation. Next, divide that number of months by your desired savings goal.
This gives you the precise amount of money you need to save aside each month until your departure.
Interested to know how this works? Let's examine a case in point.
Example: New Zealand Vacation in the Future
Consider that you want to visit New Zealand for two weeks next year. You conduct some investigation and arrive at the following figures:
- A round-trip flight $1,100
- Hotel $150 (per day)
- Food $50 (per day)
- Souvenirs $200
- Costs of travel, tours, and entry $100 (per day)
This trip will cost $5,500 in total. In order to have enough money for this trip in 12 months, you will need to save $458.33 every month.
Step 3: Reconsider Your Plan
We've only developed a working plan thus far. It's likely that you're surprised by how much money you need to put aside; don't worry, that's typical.
You can make a few changes to the plan to make it more financially feasible:
- Adapt your monthly spending plan: Look for spending you may reduce, such as eating out, subscription boxes, and other similar expenses. As a result, you will have extra money each month to put toward your vacation fund.
- Begin your side hustle: The simplest approach to increase your income is through side work. A dollar more brings you that much nearer to your vacation objectives.
- Modify your travel schedule: Review your trip schedule. Is there any way you may reduce your spending, possibly by choosing hotels with lesser rates or dining less out? This will lower the overall cost of your trip. As an alternative, you could postpone your trip longer in order to require less monthly saving.
Example: Finalized Itinerary for the Trip to New Zealand
Maybe you come to the conclusion that you cannot possibly afford to save $458.33 per month. No need to worry, you may still travel.
After considering the three possibilities above, you can adjust the following:
- Reduce your $25/month membership to a box and your $150/month dining out budget. The $175 saved each month can be used to pay for your New Zealand trip.
- Start a side business to add $200 more to your monthly income.
- Choose to spend $50 a night in a travellers' hostel instead. The target savings goal of $1,400 is now freed up as a result.
These adjustments have reduced your saving requirement to $4,100, or $341.67 monthly. Additionally, you have freed up $175 per month from your spending plan and are generating an additional $200 per month, for a total gain of $375 per month. You can finally save enough money for your trip now!
Step 4: Put Your Savings on Autopilot
It's time to implement your strategy now that you know how much your vacation will cost and how much to save each month.
Yes, you may make an effort to remember to put money aside into your savings account each month. However, we guarantee that you won't remember it because of a distraction (much like the time you left your vehicle keys in the refrigerator and couldn't locate them later).
Put your funds on autopilot as an alternative. Chime's automated saving option can take care of this for you. In this situation, you can configure your bank account to automatically remove funds following each paycheck.
All you have to do is divide your desired savings goal by the total number of paychecks between now and the departure date of your vacation. You can program your account to deduct that sum from each paycheck so that everything runs completely automatically.
Are You Prepared to Depart?
All you'll have to worry about if you follow these four steps is remembering your camera and choosing what fun things to do when you get to your destination.
