Turn your dream vacation into a reality
Financial planning can help you take your dream vacation.
Summer has finally arrived, and after a long winter, it is time for a vacation. Unfortunately, some vacations will remain dreams, but a good financial plan can turn any dream into reality.
Start your plan by selecting a destination and timeframe. You will need this information to calculate an approximate cost for the trip. Travel websites such as Kayak.com and Travel Zoo provide information about locations and price. Remember, adjusting your timeframe or destination could lead to a better deal.
The approximate cost of the vacation should include all of the variables that you can compose. Obvious costs to include are travel, food, hotel and excursions. Not-so-obvious costs may include tips, boarding or care expenses for pets that are staying behind and travel insurance. Once you have your determined an approximate cost, divide it by the number of months left before the start of your vacation. For example, if the cost is $2400 and there are 10 months remaining before your scheduled departure, then divide $2400 by 10. The answer is $240, which is the amount you need to save monthly to reach your goal.
The next step is to review your income and expenses to see if there is any way to produce the extra savings needed for your vacation. Is there anything that you are willing to sacrifice now to reap the reward of a vacation later? Perhaps there is no room in your budget to save anything extra. There are alternative considerations that may help you turn your dream into a reality:
- Examine your vacation plans to see if any reductions can be made
- Find an additional job
- Sell items online or at garage/rummage sales
- Turn a hobby or skill into a small business
The additional savings should be kept in an account that is not readily accessible for withdrawals. Most credit unions offer ‘goal-setting or personalized’ savings accounts which will allow you to accumulate savings separately from your other household accounts. These special accounts may pay a higher interest rate and grant one complimentary withdrawal annually.
Michigan State University Extension educators encourage consumers to incorporate financial planning principles when setting financial goals. Contact your local Extension office for more information or visit our online money management course, ehomemoney.org/msue.
If you are wondering about your financial health, take a financial health survey from MI Money Health to get your financial health score! It is confidential and your answers never connect back to your name. This survey can help you evaluate your current financial situation, provide ideas on how you may improve your financial health and connect you to resources in your local community.