With the summer months coming up, my wife and I are preparing for our annual vacation. While we are both limited in the number of days that we can take off, we always make a priority to take a week off in honor of our anniversary. We haven’t always been able to take the vacation of our dreams, but we usually do something. While I would be happy camping for a week, my wife reminds me of her constant desire to travel to new places. Sometimes I realize that I would be a boring person without her.
I am sure most of us, if financially capable, would love to travel the world. Yet, it’s not always that easy, is it? Are you left wondering how to balance staying within your budget, while also not missing out on your life? Budgeting for your vacation doesn’t have to be complicated – but it something you should be attentive of. The last thing that you want is to pay for a vacation with your credit and be forced to pay for it over the next year or two of your life, while constantly “kicking” yourself for letting go.
How My Wife and I Budget for Vacations
My wife and I take a rather relaxed approach to paying for our vacations. Again, while we typically do not go all out for our vacations, we do usually spend between $1,000 and $2,000 each year. This is a small luxury for the many sacrifices we make during the year. We don’t make a lot of money each month and we know that there is no way that we can pay for the entire trip in one month. Can anyone?
The trick for us to pay for our vacations ahead of time is to spread out the expenses. For our vacations, there are usually 1 or 2 big expenses. The first is our accommodations. Regardless of where we are going, we have to sleep somewhere and this is often the most expensive aspect. It’s also important to point out that housing accommodations usually require a reservation and deposit. An easy way to relieve our expenses during the month we actually take our trip is to pay for the housing months in advance. While this uses up our free cash in another month, it keeps us from overspending on both months. I have found this helps me enjoy the trip even more. Not only is the trip paid for ahead of time, but it has been gradual over several months.
Other Ways to Budget for Vacations
Split Up the Cost Evenly: Another practical way to avoid having to pay the entire amount of the vacation in one month is to add up the total cost of the trip (for example $1400) and divide it by the number of months left before the trip actually happens (let’s say 7 months). This comes out to a monthly fee. In our example, it means that you have to pay $200 per month for this trip. It can sound a lot better than the total price of the trip. While I think this is a legitimate option for many people, I avoid this for two reasons. 1) You generally can’t pay for it this way. Like I said, there is usually a pretty hefty deposit. This means that managing your finances for this trip just got a lot more complicated because you are recording expenses on different months than they actually occurred. 2) The second reason that I avoid this route is that it too complicated. It takes a lot of work to save X amount per month. I would rather only have to keep track of the expenses for the trip for a few months out of the year – not all 12.
There plenty of other ways to budget for vacations. The College Investor polled his readers a few weeks back (when I was preparing this post) and they gave a variety of responses. These vary from creating sub-accounts designated for different activities to some combination between savings and budgeting.
How do you budget for vacations?