Saving for Vacations

One of biggest problems with reading so many blogs is travel envy. Most of the bloggers I follow take these over the top trips. After a while, you start wanting to mimic those trips. Travel Envy is Dangerous!

Photo Credit: Intercontinental Tahiti 

My problem is that I have a limited number of points. Also, some trips can not be paid for solely by airline miles and hotel points. Next year, I hope to travel to Antarctica to finish my 7 continent goal. Airline miles will only get me to and from Argentina. The cruise portion will need to be paid in cash and it ain't cheap.

Photo Credit: Quarkexpeditions.com

I always knew that Antarctica trip was going to be expensive, close to $10,000. Luckily, I have been saving for this trip for over three years. A little each paycheck goes into a savings account. At the moment, I have a little less than 1/2 of the trip saved.

As a mortgage loan officer, I get an opportunity to peer into the financials of hundreds of people a year. I dig through their credit card debt and peer into their savings habits. By the time my borrower's sign the paperwork for their new mortgage, I typically know more about their financial health than they do. One area that shocks me is that lack of savings for vacations. Less than 10% of my borrowers have a dedicated savings account for vacations.

Earlier this month, the Transamerica Center for Retirement Studies (TCRS), in a collaboration with the Global Coalition on Aging and the U.S. Travel Association, released a study that looked at how people plan and save for their retirement travel dreams. While the survey was tailored to talk about travel during retirement, the survey results produced some interesting insights into people's mindset towards travel:

70%  say travel is an important goal worth saving for,

15% place a high priority on saving,  50% place high/medium priority,

Nearly two-in-ten have explicitly factored travel into their savings plan, 

4% have dedicated savings account

Only 4% of survey respondents have a savings accounts devoted for vacations. That is kinda sad. Yes, the question was about a savings account devoted for travel; instead of savings accounts overall. Generally, most people have some type of savings account. That savings accounts becomes a catchall for emergencies, travel, Christmas gifts etc. I strongly believe you should have individual savings accounts for your goals. Without separate accounts, its hard to determine if you ever accomplish your goals.

Regardless of what others might write, trips cost money. My airline tickets to Australia & New Zealand that I recently booked with US Airway's miles came with $200 worth of taxes and fees. That's just for the airline tickets. I haven't even started booking lodging. Then there is the local transportation cost, activity costs and of course food and booze. Two years ago, I took a trip to Tokyo and paid for all the airfare and all hotel nights except 1 night with points and miles. However, I still spent $1,500.

Saving for vacations is simple. Here are three easy steps to making it happen:

   1) Open a savings/checking account devoted solely for vacations

   2) Set-up an automatic transfer from your checking account to the savings account monthly

   3) Review every few months to see if you can increase your contribution

Within a short time, you will have a small pot of money to spend on travel.  The hardest step is opening the account and making the decision to start saving for trips. After a while, you won't miss the money being transferred from your savings account. If you want to start traveling the world, start saving your money. Points and miles will only get you so far, cash will be needed to make up the difference.

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