If you thought you needed a vacation in previous years, you’re probably dying to take one in 2021. After an entire year spent in lockdown trying to survive the pandemic, we all deserve a little R&R. Fortunately, COVID-19 restrictions are being lifted, and vaccines are becoming more widely distributed. But one question remains — are you financially ready for a vacation?
If you’re looking to plan a trip shortly, here are six tips to make sure you’re financially prepared.
No financial advisor will ever counsel against having a budget — they’re always a great tool to have. But if you’re planning a vacation, they are an absolute necessity. Without a budget, saving can become nearly impossible, and vacations are something you have to save up for. Strict budgeting for a few months will also help you answer some important questions, such as:
- How much can I realistically spend on a vacation?
- How much should I save before my trip?
- How long will it take me to save for a trip?
- What expenses can I cut out or cut back on to save more for my trip?
A budget will help you to visualize your monthly income and expenses clearly. From there, you can comfortably plan a vacation. There are plenty of budgeting apps out there (some are even free) to help you get started. Find one that meets your needs and start creating your budget. You’ll feel so much better once you lay it all out.
Even if you don’t plan on taking a vacation for a few months, it’s never too early to start saving. Creating a budget will help you save, as a budget is essentially a spending plan for your money. But don’t just think about your income and expenses; think about how much you can realistically put aside each month. If you’re sticking to a budget, saving shouldn’t be a problem.
Consider switching to a debit card that helps you save money automatically. These cards will round up every purchase you make to the nearest dollar. The round-up amount is then added to your savings account. This is a painless way to save that requires zero work on your part.
If you only look at prices for one hotel or one airline, it might look like a vacation is out of the question. In reality, maybe you can afford it — you’re just not looking at all of your options. If you plan to purchase airline tickets for your trip, use flight comparison tools to see all your choices. If you’re flexible about what airline you fly or what day/time you leave, you may be able to snag a deal.
By the same token, you can also compare prices for places to stay. By browsing Airbnbs and comparing hotel prices, you’re bound to find something that fits your budget and needs. You’ll also be forced to ask yourself the tough questions, though. What’s more important to you: price, location, or lots of space? How many bedrooms would you be willing to settle for? The list goes on.
When all’s said and done, you should be able to identify a place that accommodates both your needs and your price point. Check comparison tools frequently and build your budget around what you find.
If you were a frequent flyer pre-COVID, there has never been a better time than now to use your points. Due to the pandemic, many airlines have become more lenient in how they handle points and rewards. Airlines want to keep their loyal customers; therefore, many are extending miles, points, and elite status to customers.
If you were sitting on some frequent flyer miles, there’s a good chance they’re still valid thanks to the extensions airlines are offering. Be sure to check into the status of your miles as you plan your next trip. Getting a free flight to your destination will make your vacation that much more financially feasible.
Let’s face it; you’re likely to splurge a little bit while you’re on vacation. After all, you’ve probably been cooped up in the house for about a year now. The first time you venture out beyond your city or state, you’re going to want to make it worth your while. This YOLO impulse is fine, so long as you plan for it.
Obviously, transportation and a place to stay are both essential. But think about other expenses, too. Do you plan on cooking every meal at your destination or eating out while you’re there? Either way, you’ll have to buy food.
Will you want to shop? Are you planning fun activities? Even if you don’t have your exact itinerary planned out, budget for the “just in cases” and “gotta haves.”
To start saving extra spending money for your trip, look into money-saving apps. Within these apps, you can set savings goals for your vacation and link your checking account. Most apps will have an algorithm for calculating how much is transferred to your savings account.
It would help if you didn’t have to abuse your credit card(s) to afford a vacation. However, if you have a healthy relationship with your credit card and some rewards to use, why not take advantage?
Check out credit cards that are geared toward travelers. Some yield double miles for every dollar spent or let you use points to book flights and hotels with no blackout dates. If you’re thinking about traveling abroad, cards with no foreign transaction fees will make your overseas adventure more affordable.
Like the idea of sailing through airport checkpoints? Some cards will even credit up to $100 of your application fee for the TSA PreCheck and Global Entry programs.
When the time comes to take a vacation, you should be able to spend guilt-free. Taking the necessary steps now will not only help you afford your vacation, but it will also make your vacation more enjoyable. Your future self will thank you when you’re enjoying a vacation that is free from both pandemic anxiety and financial stress.