Budgeting for Stress-Free Vacations
If you’re one of the millions of Americans hoping to get away this summer, you may be well into the planning stage. According to NerdWallet’s annual summer travel survey, nearly half of Americans plan to take a trip that requires a flight or hotel stay this summer, and they’ll spend $3,594, on average, on these expenses.
For many of us, this requires careful budgeting and planning so we can make the most of our getaway without going into debt. As a banker and a family man, I have both seen and experienced vacations that have gone awry and resulted in financial distress. I’m happy to share what I have learned about successfully budgeting for your next trip.
Examine your finances. First, take a look at your accounts to see what you already have saved. This will give you starting point when making your vacation budget. It also helps you determine when — and if — taking a vacation is a good idea. For many people, taking time off means not getting paid. If that’s the case for you, be sure to factor a reduction of income into your budget.
Budget realistically. This is the most common mistake I see people make when planning a trip. Hotels, airfare, gas, meals, and entertainment costs vary widely depending on the location and time of the year. Research costs associated with your destination online and ask friends and family members who’ve visited there before.
Set up a travel savings account. Establish a designated account to keep your travel funds separate. Midwest BankCentre offers several options for savings accounts, most of which can be opened online in minutes.
Shop around to get the best prices. Is booking directly with the airline or hotel the most cost-effective approach, or should you book through a third party? Could a travel agent save you money? Always ask if discounts are available.
Be flexible with travel dates, if possible. See if shifting your vacation dates could impact your savings. Be aware of peak travel times when hotels, airfare, car rental, etc. are more expensive. Some attractions, like museums, offer discounts on certain days. If you can be flexible, you can often travel for cheaper.
Prepare for the unexpected. Flat tires, hidden fees, flight delays or cancellations causing an extra hotel stay…these things happen. Be sure to have money set aside to cover any unanticipated expenses and carry a small amount of cash for emergencies.
Understand your spending limits. Most personal debit cards have daily spending limits to prevent fraudulent spending. If you exceed your limit, your card may be declined. Call your bank to find your daily spending limit. You may be able to increase your limit if you think it may be necessary.
Leverage your credit card rewards program. Certain credit cards are tied to dedicated airlines or hotels and provide perks like free checked bags or upgrades. Others offer travel reward points and miles or cash back on travel booked with the card. Look up what discounts may be available through your card’s rewards program.
Before you leave, it’s always a good idea to notify your bank and credit card company of your travel plans so they’re aware that there will be abnormalities in your usage. They may flag an intentional expense as fraudulent and cancel the transaction, leading to unexpected stress.
Talk to your banker about additional budgeting options. They know you and your financial situation best and may be able to help you reach your savings goal faster.
If you get carried away and blow your budget, don’t panic. It’s easy to forget about the real world when you’re having fun on a vacation. Remember that getting out of debt is a process that doesn’t happen overnight. Develop an intentional plan to get back on track and stick with it.
Midwest BankCentre’s purpose is to help our clients — our neighbors — thrive. As their trusted advisors, our team helps them reach their financial goals, whether it’s saving for a vacation, buying a home, or starting or scaling a business. Give us a call today to find out how we can help your dream vacation become a reality. Contact us at 314.631.5500 or visit us online at MidwestBankCentre.com.
Originally published in Labor Tribune's May issue of 2024 by Wes Burns, EVP of Community and Economic Development.