Financial Planning for Vacations
With summer vacation coming up, many families will be heading out on vacation. Here are some tips and things to think through as you plan your next trip!
Importance of financial planning for vacations
Planning ahead helps you set a budget, prioritize expenses, and save accordingly. Financial planning for vacations allows you to enjoy your trip without worrying about money and helps you make the most out of your travel time together!
It’s also a great way to prevent vacation spending remorse. If you don’t think ahead then it’s easy to overspend when your brain tells you “YOLO!”
Setting a budget for your trip
When planning your vacation, it's essential to set a budget to keep your expenses in check. Start by determining how much you can afford to spend on your trip without straining your finances. Consider expenses such as transportation, accommodation, meals, activities, and souvenirs. Create a detailed list of anticipated costs to help you allocate your budget effectively. Keep in mind that unexpected expenses may arise, so it's wise to set aside some extra funds as a buffer. By setting a clear budget, you can enjoy your vacation without worrying about overspending.
You shouldn’t be surprised to know that “there is an app for that!”. Check out TravelSpend, a travel budgeting app if you are planning at trip to gauge expenses, or use it while you are out in the world. If you want to learn about more apps, check out the following article: 7 best travel budget apps for your next vacation
Saving strategies for travel expenses
Consider setting up a separate savings account specifically for travel funds. Many families use a special account at their credit union or bank to save up for vacations all year long. Automate regular transfers so you can save without thinking too hard or accidentally spending it before you can manually transfer it over (out of sight, out of mind!)
Research different travel options and destinations to find the best deals and discounts. I know that a lot of families love to buy package trips from Costco! Triple A (AAA) also offers lots of deals and coupons with their membership.
As far as destinations go, if international travel is on your list, make sure it is somewhere where your US dollars will go far (right now the USD is very strong vs. many other currencies, meaning it will buy you more in local currency with fewer USD. There are lots of websites that will show you currency exchange rates today vs. historically).
This is a chart of the USD vs. the Japanese Yen. Today’s rates are near 160 yen per dollar. Just four years ago, your dollar would only buy about 105 yen. Since your dollar buys more yen, then it’s much cheaper today to travel to Japan!
Another trick is to stay in a location that is just a short travel distance away from a more expensive location. For example, instead of paying for Manhattan hotel rates, book a room in Queens and take the subway to the city to explore.
Finally, don’t rule out locations where the airfare may be more expensive, but the cost of lodging and dining once there is incredibly cheap. The total vacation cost may actually be less than the place with the cheapest flights.
Additionally, consider earning extra income through part-time jobs or selling items you no longer need to boost your travel fund. There are lots of local stores or online shops that will buy your gently used clothing you no longer need, and Craigslist is still a pretty active place to sell furniture. With the high cost of transportation and food after several years of inflation, every little extra bit helps!
Choosing affordable accommodation options
When planning your vacation, opt for budget-friendly accommodations to save money for other activities. Consider staying in vacation rentals for at least a week to get better rates and spread out the cleaning costs and booking fees over a longer period of time.
Additionally, booking in advance or during off-peak seasons can help you find cheaper deals. My family will often go to popular winter destinations (like Bend, Oregon) in the fall because hotel rates are so much better and it’s still a beautiful place to be without the snow! Keep in mind the location's proximity to attractions and transportation options to ensure convenience during your stay.
Our family loves to hike Smith Rock when visiting Bend in October. It’s a regular trip!
Finding budget-friendly transportation
To find budget-friendly transportation for your vacation, consider these tips:
Look for discounted airfare during off-peak seasons or utilizing travel rewards points. Use Going.com (formerly Scott’s Cheap Flights) to find the cheapest flights to various locations from your main airport, or check out seats.aero for the best itineraries for your specific travel points.
Consider alternative airports for potential savings. For example, Eugene to Burbank is way cheaper than Eugene to LAX!
Explore train or bus travel options, which can sometimes be more economical than flying.
Check for group discounts or promotions for rental cars if your trip requires one.
Remember, early planning and flexibility in travel dates can significantly impact your transportation costs for your next vacation.
Planning activities within your budget
If there is one activity that you want to splurge on because it’s on your bucket list (or the whole purpose of the trip, i.e. Disneyland!), plan for it ahead a time and balance out your activity budget with free or other low-cost activities. Parks, farmer’s markets, local museums and natural areas are a great way to discover a location without spending too much money.
p.s. If you are heading to Disneyland, I think there are whole websites, blogs and Instagram accounts dedicated to stretching your money in the most magical place on earth.
Tips for saving on food and dining expenses
I know that travel days will be stressful and there may not be time to eat at normal times. I always buy a box of protein bars from Costco ahead of a trip so that we have a quick but substantial snack to tie us over and prevent us from buying expensive airport food. Even fast food is expensive today if you are on a road trip!
You can also save money buy booking accommodations that include a kitchen or kitchenette so you can prepare your own food. Even if your hotel room has a fridge and microwave, choose meals when you are eating out that keep well. You could make the cost of your dinner stretch if you eat the leftover for lunch.
When you arrive at your location, go grocery shopping and buy snacks for the whole week. You can pack your own snacks and reusable water bottles to avoid overpriced snacks and drinks while you're out and about.
Plan to have a few splurge meals at local restaurants to balance saving money with enjoying the local cuisine. Research affordable eateries in the area you're visiting to find budget-friendly dining options. Make it a game and it will be more fun!
Managing unforeseen costs during your trip
Stuff happens. Here are some tips to help you manage unforeseen costs:
Create a contingency fund: Set aside some extra money for emergencies or unexpected expenses.
Research travel insurance options: Consider purchasing travel insurance to protect yourself from unexpected costs like trip cancellations, lost luggage, or medical emergencies, but be careful not to overpay!
Keep track of your expenses: Monitor your spending using some of the apps mentioned above or just use a pen and paper for each day.
Plan for transportation delays: Leave some buffer time in your schedule in case of delays or cancellations in your transportation plans.
Have a backup payment method: Carry a backup credit card or some cash in case your primary payment method isn’t accepted or compromised.
