How to plan for future vacation spending?

Holidays are an important part of maintaining a balanced lifestyle. They help us to decompress from our jobs and create meaningful bonds between the people that join us. Whether it be a global adventure or a quiet stay-cation, proper budgeting in advance can help to prevent over-extension, and therefore ensure that the event is as stress-free as possible.

The first step to planning out a vacation is to come up with a plan of the essential things that we want to do on our time off. This can include places that we want to visit, things that we want to do or see, or specific souvenirs that we’d want to purchase. Once we have this essential list of musts, we can start to break down the costs of each activity. For example, what do we need to do in order to visit a beach in Spain?

Firstly, we need to fly to Europe, then we need to rent accommodations, then we need to make sure we have proper beachwear. These things also come with their respective costs. The flight itself will cost anywhere up to $1,500, while the accommodations will be somewhere around $100/day. From there, the beachwear will be somewhat negligible if we can bring it all along. From here, we now know that it will cost us about $2,000 to travel to the beach in Spain for five days.

The second step to our process is to then look at how far away into the future we are planning for, and determine what kind of savings we need to budget for. This can be accomplished with the help of any financial calculator, which will show us the impact of savings account interest on our plan (which will usually shave a few weeks or months off of our timeline, depending on how much money we are dealing with).

That being said, we can come up with a fairly simple ballpark figure of how much we’d need to save every month by simply dividing the amount of money required by the length of time until our vacation. With our previous example, we would be able to meet our simple cost budget by saving up $170/month for a year. Simple stuff right? Here’s how we can now start to use this information to our advantage.

Once we’ve combined the costs of all our different vacation goals, we can start to compile an over-arching savings timeline that will help us to save for our plans most efficiently. We start by putting all of our vacation goals together into a single pool that shows us all of the various vacation goals that we want to accomplish over our lifetime. We then separate our goals into different categories, based on their achievability in accordance with our current financial position.

For example, a short-term but expensive vacation might be better suited for those periods in our life when we are working, and able to fit it into our scheduled vacation days. We would therefore prioritize this vacation over and above a vacation that is long in duration, but somewhat inexpensive, as this might be better suited as a retirement trip, or for when we are in-between jobs. Once we’ve separated out the timings of these vacation goals, we can then start to look for any opportunities to accomplish multiple goals at once. For example, a beach vacation goal might actually go hand in hand with a European travel vacation, meaning that we can do both at once, and therefore save on fixed costs like flights and hotels.