Just about everyone has an opinion about an ideal vacation, and planning for the trip can be exciting. In order to pay for the trip, however, you need to know what you’re paying for and how you’ll save enough money. Read these tips to set up a savings account to fund your ideal vacation.
If you’re looking for a travel destination where you can enjoy a great round of golf, consider Singapore. You can book Sentosa golf club in Singapore, or find other great golf courses in the same area. On the other hand, if you just want a beautiful beach, you can try South America or locations in Southeast Asia.
A long-term budget
Creating a budget requires careful planning. Assume, for example, that you want to save $3,000 for a two-week trip to Europe. To reach your savings goal, work through these steps:
- Monthly net income: The starting point is your monthly net income. If you’re an employee, your net income is the net amount you receive in your paycheck each month. Net income is harder to compute if you’re self-employed, because your income may vary from one month to the next. If you’re self-employed, calculate your average monthly income for the last three to six months. Make sure that you deduct any tax withholdings you set aside to pay federal and state taxes.
- Your monthly budget: Many people use a mobile app to plan and track their personal finances, while other consumers use a notebook. If you don’t create a monthly budget, start by writing down your spending in a notebook. Jot down your net monthly income at the top, and create a line item for each expense you pay. Use your bank statement and credit card statements to determine the total spending in each category.
- Fixed vs. variable spending: Once you have each line item of spending, label each expense as either a fixed or variable expense. Your car payment and insurance premiums are typically fixed monthly expenses, and your meals and entertainment costs are variable.
Assume that your net income is $5,000 each month. Your fixed expenses total $4,000, and your variable expenses sum up to $1,000.
Creating a savings account
If you don’t have a savings account, you can reduce your spending to create one. Take a hard look at your variable expenses, because those costs can be cut back. This involves an item-by-item review of your spending. Here are some ideas for cutting variable spending:
- Dining out: If you eat four meals a month in restaurants, try cutting it back to once or twice a month.
- Coffee, lunches: This is an area that is often ignored in budgeting, and your expenses in this category can add up quickly. If, for example, you buy coffee at Starbucks five mornings a week, make coffee at home a few of those days. Also, try making lunch more often, rather than picking up food somewhere during the day.
- Entertainment: This category might include attending movies, renting movies online, and attending museums, or concerts. If you like watching movies, rent more movies at home to cut expenses.
Once you make your cuts, add up your savings. Commit to funding a savings account each month. You can have your bank move money from checking into savings automatically on a specific date, so you can “force” yourself to save. If, for example, you’re able to save $300 a month, you’ll have enough saved for your $3,000 trip to Europe in ten months.
Keep in mind, however, that you may have an unexpected expense during that three-month period, such as a car repair. Try to build some additional savings into your plan, to cover those emergency expenses. Instead of three months, you may plan your trip for 12 months from now, which would give you $600 to cover an emergency.
Stick to your budget
Your vacation budget should cover airfare, hotels, taxi and shuttle services, and any other fees you’ll pay along the way. With proper planning, you can save enough money for your ideal vacation.
