So, you are taking your summer vacation. Enjoy the mountains or the beach or the lake. Maybe you are headed to a foreign, exotic destination. You and your family deserve the break but don’t let your vacation break your bank!
According to a 2017 survey, 74% of people say they’ve borrowed to pay for a vacation and most incur at least $1,000 of debt to do so. That’s a big hit to many budgets and if the balance is not paid off, they will pay interest on that amount. This poor spending habit is rampant in our culture and most don’t think of the consequences at the time.
In addition to the debt incurred, 55% don’t budget for these vacations which can be 10-15% of a family’s income. If considered in this light, it seems insane to make such a purchase. When spending money on an item that consumes that much of a family’s income, most would think long and hard about doing so, especially if the item was a want rather than a need.
So how can your family avoid this financial pitfall? Figure out how much you’ve been spending on vacations over the last few years and calculate the average. Then use one or more of these savings strategies:
- One of the ways many compensate is to slow discretionary spending such as going out to eat, spending on entertainment or shopping for items that are not essential. However, these savings rarely cover the vacation bill.
- Using your calculated average spending amount, divide it by 12 and put that money away.
- Create a vacation savings account and add to it each month.
- Calculate what you want to spend and set a budget for spending while on vacation. Although you may not be able to strictly keep to this, it is better than spending without thinking.
Many people spend more time planning vacations than planning retirement. Avoid this mistake by setting up a time to consult a Certified Financial Planner (CFP) and assure your future is as bright as your vacations.
Get in touch with Les Merritt to plan for the future and consider how you can have your next vacation as a debt-free experience. He has worked with families to secure their future for many years in the Carolinas. Learn more by contacting Les Merritt, CFP and CPA at (919) 269-8553.