Summer is approaching and like many, you might be wondering how you’re going to make a vacation happen without taking on additional debt. Traveling can create meaningful, lasting memories, but it can also create debt that’s difficult to pay off. However, with a little planning – you can make sure souvenirs and memories are the only things you’re coming home with (bye-bye vacation debt)! Here are some tips for planning a summer vacation that fits your budget.

Start with a Trip Cap

What can you comfortably afford to spend on a vacation? Consider your current and future financial obligations, as well as what you can realistically save by the time vacation rolls around. The amount you can comfortably afford to spend should be your trip cap, or the maximum amount you should spend on your vacation. By having a trip cap, saving should feel stress-free and your other financial obligations and goals won’t be skipped to make vacation happen. You’ll also be able to decide on a realistic destination that you can afford currently. A trip cap will also guide your next step: creating a vacation budget.

Create a Vacation Budget

Budgeting for a vacation is not all that different from budgeting for day-to-day life. There will be fixed expenses you can expect like lodging and airfare, and variable expenses like meals and souvenirs. Have a vacation destination in mind before creating your budget. You’ll be able to research real costs ahead of time, so your budget is realistic and you won’t run out of funds before takeoff.

Here are some categories you should factor into your vacation budget:

• Lodging
• Airfare (if your destination requires it – if not, add on the cost of your chosen method of transportation)
• Transportation (such as public transit or rideshare service to get around while on your trip)
• Meals
• Activities
• Shopping

You’ll also want to check out our previous blog post on money-saving travel tips. You might not be able to avoid certain travel expenses entirely (lodging or meals), but there are still ways to make your trip fit your budget. For example, choosing to stay in a hotel that offers free breakfast – leaves you paying for one less meal per day throughout your entire trip.

Plan for the Unexpected

Your budget should also include a buffer for unexpected expenses. This buffer will help limit stress and avoid using a credit card you didn’t mean to use in the event of an unexpected expense. A general rule of thumb is to reserve 10-15% of your budget for those potential expenses. For instance, if your trip budget is $2,000 – at least $200 should be reserved for unexpected expenses.

Here are examples of some unexpected expenses that this buffer could cover:

• Medical emergencies
• Lost or delayed baggage
• Delayed or cancelled transportation
• Currency fluctuations if traveling abroad

Use a Dedicated Savings Account

Putting your vacation fund in a special savings account can help you avoid dipping into it for everyday expenses throughout the year. It can also help you visually track the progress you’re making. You’ll be less likely to use funds from your dedicated vacation savings account, than funds that are mingled with your everyday spending money.

If you live, work, worship, volunteer, or attend school in Monmouth or Ocean Counties in NJ – our Summer Savings Account is another way to save for vacation expenses.* Start saving for your future summer trip in the fall, and elect to have the funds transferred entirely on July 1 or split between 50% on July 1 and 50% on August 1  – depending upon the date of your summer travel.

Automate Your Savings

Automating your savings each month can take the willpower out of saving money on your own. The funds will be distributed into your designated savings account before you even notice – out of sight, out of mind! This also reduces the chance that you will skip making the manual transfer between your accounts, since automating takes away the need to decide.

Deposits into a First Financial special or summer savings account can be made via payroll deductions or direct deposit, helping you pay yourself first every payday and save consistently. Then, when your vacation rolls around – you’ll have a savings fund that will help you enjoy it without financial regret.

The moral of this story? It is possible to have a memorable vacation without going into debt, by saving and spending intentionally within your means.

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*A First Financial membership is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. Other terms & conditions may apply, see credit union for details.