Friday, June 16, 2017

Personal Finance Tips to Save Money Today for Summer Travel Ahead

Happy Friday friends! Lauren Davidson, a senior at a prestigious university here in Philadelphia, contacted me about sharing an article to build her writing portfolio. I am not one to give space for free, but sometimes the Grinch's heart grows three sizes in one day, and it did this time, so here it is. 

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With the economy finally picking up steam, many families are looking ahead to their first real family vacation in years, or ever. As the summer season approaches and plans are finalized, now is the time to get your finances in order so you can enjoy the time away without worrying about those post-vacation blues. While there are a number of things you can be doing to get financially prepared for a great vacation, here are three essential personal finance tips.

Create a Budget and Saving Plan

Trying to plan and execute a vacation without a full scale budget and savings plan is certain to lead to disaster – or, at least disappointment. Any financial endeavor worth pursuing must have a plan in place if you want to realize your vision. A successful family vacation requires a plan consisting of three steps:

Establish a goal. Any type of vacation plan is going to have a cost. You need to determine what that cost is and whether it is reasonable in light of your capacity to save for it. That means creating a detailed vacation spending plan, complete with time line and expenses, leaving room for a splurge or two and the unexpected. The last thing you want is to have to turn to your credit cards to cover your expenses.

Establish a savings goal. Based on the amount need to fund your complete vacation, you need to establish a goal for how much money you will need to have in your vacation fund. If your savings time frame is less than a year, you should expect to earn zero interest on your savings. So, if your vacation expenses will run $3,000, you need to calculate how much needs to be saved weekly between now and the start of your vacation. If your vacation is planned for 25 weeks out, you will need to save $120 a week.

Find the savings in your household budget. Saving $120 a week, or around $550 a month can be a tall order for some families. That is why you need a household budget. If the goal is important enough, you should be able to reprioritize spending for a short period of time. Comb through every single expense in your budget – both essential and non-essential expenses – to see what can be redirected to savings. You will be surprised with what you can find. The important thing is to then make your savings contribution the first expenditure in your budget.

Budgeting and saving, especially for a short-term goal, can be difficult to manage for some families, which is why it is recommended that you employ technology to help you. There are two apps that can be particularly helpful. Mint from Inuit and You Need a Budget are personal finance apps available on iOS and Android that let you track and manage your spending and saving in real time. They can also be instrumental in helping you to pay down debt, which is the next essential tip to follow.


Pay Down or Refinance Debt

If you have a large amount of debt, you should consider whether now is a good time to take a family vacation. Paying off high interest debt should be a top priority for any family. However, if your debt is manageable and, more importantly, there is a chance to pay it off or, at the very least, refinance it to lower your monthly expenses, now would be a good time to put that strategy into action. Here are some steps to take with your debt right now.

Credit card debt: See if you can find a 0% introductory rate credit card to transfer any high interest credit card debt. Ideally, you can find a card with at least a 12 month promotional period.

Student debt: While it’s not possible to pay down student debt in a short period of time, you may have available some options for lower its cost, either through student loan consolidation or refinancing.

Mortgage refinancing: With the likelihood of higher mortgage rates in the near future, this may be your last chance to lock in low rates. If you have been considering it, doing so now could lower your monthly expenses to allow for more savings.


Make it a Family Endeavor


By making it a family endeavor, one in which everyone contributes by finding new ways to save and make money, the vacation will turn out to be a rewarding experience and much more enjoyable for all. Enlist the kids to organize a yard sale, or help with selling items on eBay or Craigslist. Putting the kids in charge of tracking the savings goal will keep them involved and active in holding everyone accountable. 

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What do you do to save money for travel? 









3 comments:

  1. Definitely having everybody buy in on the plan is key!

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  2. I have noticed that the beach is a lot more crowded the last two or three years than the prior ones before that when we are down there in the summer! Vacations are expensive but so worth the experience over material items that collect dust in the house.

    ReplyDelete
  3. Great tips to stay on track! So glad I don't have student loan debt cause I'd never be able to save for travel!

    ReplyDelete

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