Ready, set, relax! Tips to prepare for a financially worry-free vacation.
June 19, 2014
Summer vacation is an opportunity to unwind from the stresses of day-to-day life and spend time with loved ones. The key to a successful and relaxing vacation is to minimize distractions. But worrying about what your trip is costing you is bound to detract from your holiday fun, and nothing kills the post-holiday buzz like an unexpectedly large credit card bill overflowing with unanticipated expenses.
“A relaxing vacation is meant to be a reward for a year’s hard work,” says Janet Petonjic-Rogers, Bridgewater Bank’s manager, Deposit Services. “It’s a shame to have a dream trip in mind but no money on hand to pay for it. Thankfully, there are two solid strategies that can help you achieve the vacation bliss you’ve been waiting for – a budget and a savings plan.”
A savings plan is simple to set up.
1. Identify a portion of your paycheque that you’d like to set aside for vacation. Saving just $50 per pay period can add up to $1,300 in a year, not including interest earned.
2. Put the money out of sight. Open a high interest savings account to use specifically for vacation savings. If you feel like being a little more creative, consider alternate savings options like mutual funds (look for lower risk funds that have no redemption fees) or short term GICs.
3. Make your savings plan fool-proof by automating it. Set up a pre-authorized transfer from your chequing account to your savings account every pay period. If the money immediately moves to your vacation fund you won’t miss it.
A vacation budget is just as easy to create. Simply choose your destination, then put together a list of your day-to-day needs with an estimate of their costs, including:
- transportation – flight, rail, rental car, taxi, gas
- incidentals like souvenirs, replacements for items you left at home, etc.
You’ll have a clear idea of what expenses to expect, eliminating nasty surprises during or after your trip.
Other things to think about to ensure a successful trip:
- Notify your credit card provider of the dates you are planning to be away and the destination(s) you’ll visit. They’ll place a note on your file so that your “out-of-town” charges are not flagged as suspicious.
- Set up auto-pay arrangements for your recurring monthly bills so you don’t miss payments when you are travelling.
- Arrange for a neighbour, family member, friend or co-worker to:
- check your house every few days – your insurance provider will likely require this.
- pick up any mail or flyers from your doorstep – nothing says “I’m not home” like junk mail sitting out for days
- mow your lawn and water your garden
- serve as an emergency contact for your home security alarm provider.
- Consider travel medical insurance. Even a minor accident can lead to thousands of dollars of medical expenses when travelling out-of- country. Travelling without medical insurance is a major gamble. Because it’s reasonably affordable, it’s a gamble simply not worth taking.
With a little bit of easy financial preparation you can pay for your vacation up front every year and not have a depleted bank account or ballooning credit card bill waiting for you when you return home.
Looking for a place to stash your vacation savings? Our Smart eSavings Account offers a great rate and is quick to open. Learn more.