Summertime is vacation time! Someone seems to be on vacation at any given point in the summer. I love vacations! Some vacations consist of camping trips. Others are more exotic vacations. Where do you want to go on vacation? I often wonder how others pay for big trips — especially unexpected trips. Have you also wondered this? I would love to hear what you do. Here are a few ideas that my family does:
1. Retained Earnings
This is a fancy accounting term for savings. I like to have a plan for everything in life, but it’s just not possible. So, I plan and prepare as much as possible and then I try to have some flexible savings. Sometimes we don’t know exactly what vacation opportunities will come up, so having some retained earnings allows us to take advantage of these opportunities. It is also fine to turn down a vacation that we can’t afford, but I would rather find a way to be able to afford it and enjoy it. My daughter had the chance to visit family in Alaska with only a few weeks notice. She had savings, and we had some money budgeted for general vacations, which is how we paid for her to go. That worked out well, but now our family has a chance to go to Alaska in a year. This is a much bigger and more expensive trip because there are six of us going this idea won’t work for us.
2. Save Monthly
We have a budget category called vacation, and we put some money into it each month. Since most of our trips have been inexpensive, this has worked well for us. We try go to a family cabin once a month. For those trips, we use some money from our grocery budget to pay for food, and we use money from our transportation budget to pay for travel. So, we don’t have to dip into our vacation money for those trips. If you like to travel, but don’t have a specific destination in mind, regularly putting money into a savings account might be the solution for you. That way, when friends or family invite you to go on vacation, you’ll be ready. Wasatch Peaks Credit Union has resources to help us do this. The Christmas Club Savings Account is one tool that can help you save for your dream vacation by providing a separate account for you to automatically save each month.
3. Irregular Income
We all have received unexpected income. This could be in the form of a gift, inheritance, commission, or bonus. We don’t have control over the timing of this income, but when it comes, unexpected money can be used for vacationing. When our family receives a gift, there are usually many expenses which compete for that income, so we have to prioritize and pay for the top priority. Sometimes tax returns can also be unexpected money. My goal is to not have a tax return because it ties up our money, but last year our income was lower than I expected and we overpaid taxes, so we received a return. I budgeted it for vacation, which is also going to be our Christmas present (see #4). I don’t like to have more tax withheld than necessary, but it is a forced savings account.
4. Give a Vacation as a Gift
We don’t need or have room for anymore stuff around our home, so we are going to start giving our kids trips for Christmas and birthday gifts. (Most of our trips are local and don’t require flying.) We do hope to fly more in the future. We are giving our family a trip to Alaska next year so we can attend a family reunion there. Even though we don’t leave for a year, we will need to pay for airfare ahead of time. This is a challenge for our family. My husband and I have been discussing how we will pay for this since we need more than the amount that we usually spend on Christmas. Do we borrow from savings that we have set aside for emergencies and a car? Vacations are not usually an emergency, but it is a challenge to pay for a vacation before you actually go on the vacation. I’ll let you know how it turns out in a future post.
My parents gave our family a trip to Hawaii for Christmas when my step-dad retired. It was an amazing trip, and we wouldn’t have been able to go without it. We really appreciate their generosity and hope to be able to do this in the future for our children and grandchildren.
5. Pay Down Debt
Although this suggestion won’t immediately allow us to travel more, eventually it will. As debt is paid down, the freed up money becomes available for trips! We have been working on paying down debt so that we free up the money used for debt payments. I don’t recommend borrowing money for trips because that does the opposite: it ties up money.
6. Earn More Money
While our kids are young, we decided to stay close to home and explore Utah, but as they get older, we would like to go farther, and these trips cost more. I’m considering go back to work to pay for some of the trips which we would like to take in the future. We dream of going to Spain, South Africa, Norway, and other international destinations. These are going to cost a lot and we don’t have room in our current budget to pay for these, so one option we are considering is for me to go back to work.
Which one of these ideas have you used to pay for vacations? What are some other ways that you have paid for vacations?