A vacation is a well-deserved break. But sometimes, life gets in the way and then you realize the funds just aren't there when you want to get away to your coveted spot. But if you start planning in advance, you'll find that you can save enough to enjoy that destination you've always dreamed about.
Start planning and budgeting early by asking yourself these three questions:
1. Where do I/we want to go?
2. How do I/we want to get there?
3. What do I/we want to do once I/we get there?
Consider that you may want to spend more in one area than another. For example, a certain destination may have high air fares, but low hotel costs. Make sure you look at the big picture and plan out the costs for the entire trip.
Factor in all expenses like meals, transportation, tours, souvenirs, etc. and add it all up and divide by the number of weeks until your planned vacation. This will help you determine how much you need to save per week.
Set up a vacation account
Open a dedicated vacation bank account with a high interest rate and talk to your banking advisor about setting up automatic transfers each time you get paid.
Some bank accounts will automatically 'sweep' extra funds from your chequing account into a savings account that can earn you a higher rate of interest. You just need to set up a limit on your chequing account to make sure that all of your expenses are taken care of. Within a year, you could have enough for your dream vacation!
Look for deals
While you are saving for a vacation, don't forget to look for deals. Online savings sites have great deals on travel, hotels and packages that could help you get more value for your money.
If you don't have a credit card or loyalty card that offers travel rewards, it's a good idea to get one. Many airlines will offer specials allowing you to use less points for trips.
Buy foreign currency when the Canadian dollar is strong
If you plan on taking a yearly vacation outside of Canada, you'll need foreign currency.
Since much of the world's currency is valued against the U.S dollar, it's always a good idea to purchase U.S. funds whenever rates are to your advantage.
Some credit unions or banks offer U.S dollar accounts that help you save money and hedge against currency fluctuations by using this account to grow your savings when the Canadian Dollar is strong. Check to make sure that your interest and service charges are in U.S dollars.
Use your credit card wisely
While you are away on vacation, it's always a good idea to use cash for daily expenses instead of a credit card because interest rates tend to add up, and you'll end up paying more.
But keep your credit card in your wallet as a contingency. Some credit cards come with handy features such as baggage delay and travel insurance, along with emergency cash or card replacement and lost/stolen card assistance.
Don't forget to call your bank or credit card company ahead of time to find out their foreign transaction fees so you are not racking up fees on top of numerous transactions.
Also, let them know that you will be travelling just in case they think your card has been stolen and is being used in a country or city that does not match your home address.
Whether your dream vacation includes a trip across the Sahara desert, dinner on the Amalfi coast of Italy, or simply a camping weekend in Yellowstone National Park, there will always be a price tag. Taking the time to plan ahead and save your funds can make sure that it's a vacation you won't forget.
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