| July 02, 2018 |
A plethora of online resources will direct you to world famous destinations or hidden gem locales- all while highlighting the best prices and budget-friendly deals. When we can finally indulge in a much-needed vacation, our minds are usually made before we even long online to research, what location we want to be in, the hot hotels in the area, where we want to eat and what time of the year we want to go. If you’re anything like this fiscally tight gentleman, not only is your mind ringing with cashiers bells, but your eyes light up with dollar signs! It can feel like the expenses and unknowns are adding up quicker than the extra socks in our luggage. This can make saving money on the trip that much more difficult, especially if you’re planning on bone-fishing in the Bahamas during Christmas.
Having an established, allocated “trip” fund is the first step towards saving money while on your next vacation. There are several options proven much more lucrative than the traditional taboo of putting it all on credit cards or taking out a small, yet ultimately detrimental loan; out of sight certainly does not mean out of mind - or wallet. For example, should you decide to pay for the trip with cash, then pay yourself back (with interest) over time, you’re not only saving in the short term but have managed to earn a small profit while sipping your Pina Coladas poolside. You can accumulate valuable redeemable points by using your credit card, all the while planning to pay off the new charges upon your return, avoiding excessive interest charges. Use a conservative loan directly from your investment account, so your money can stay working while you pay yourself back, your feet up on vacation mode. Developing and maintaining proper savings habits as early as possible are key strategies we encourage all of our clients to work on. In our personal and professional experience, we have found that means depositing at least 15-20% of your income annually into a savings account. While this percentage may come as a shock and seem on the excessive side, but we have found that for many of our clients, their dynamic family lifestyles may lead to what we call, “unpredictable financial security.”Meaning: the future is ever changing when you have teenagers getting behind the wheel of their first car; planning to head off to college - or maybe for some head downstairs to the basement ensuite while following their artistic pursuits. Whatever the unpredictable future might bring, there should always be one element you can count on; you can control; utterly predictable: your savings.
Access to liquid assets is another big topic of discussion with our clients. Employer-sponsored 401k plans are a great tool to help save for retirement, but they may not be the best choice when it comes to fixing a broken appliance in your home or taking the family to Disneyland. It’s always important to build diversified liquidity within your savings account, cash value in a life insurance policy or investments held in a brokerage account. Cash value in a life insurance policy and investment accounts can help you build up assets that can be converted into cash to help pay for any financial needs. Take a look at your current asset liquidity and explore those alternatives before committing to maxing out your retirement plan, especially on what we would consider immediate, short-term problems. We have all experienced that heart racing feeling when your stomach twists and turns, palms become clammy when an unexpected event or accident arises and we are charged with making those quick, split-second decisions. Knowing that in those hectic moments you have choices that won't change your future retirement plans should put those twists and turns quickly at ease.
The efforts of your hard earned, well thought out savings and diversified liquid assets can help afford new, expanded options and possibilities when searching for your next memory making a vacation or unforgettable trip. The alternatives to educated savings and spending can unfortunately and ultimately be devastating towards building your overall wealth and success;( https://www.forbes.com/sites/learnvest/2018/04/17/its-official-millennials-are-going-into-debt-over-their-social-lives/#451dc9c9404a ) & ( https://www.forbes.com/sites/learnvest/2017/06/30/most-americans-are-taking-vacations-they-cant-afford/#26ef6bfd577a ). We all want to try our best to avoid being lumped in with the more significant percentage of Americans that will and have put themselves - along with their families- deeper into debt, all in the pursuit of a little relaxation and a lot of quality time together away from screens and phones.
Budgets vary from family to family and person to person depending on age, income, and how much they (or their significant others) are spending on average. It can also depend on the importance or rarity of this vacation. Will this be the one big shebang of the year, or maybe the first of several camping trips you’ve planned? The important things to take away from all of this are setting a budget, sticking to it and starting to contribute to your trip “fund” as early as possible at the same time. And again, we can't stress the importance of developing and maintaining both your savings and liquid accounts to help create an overall more comfortable, stronger, diversified budgeting strategy while acknowledging that your 401k is just for that: retirement.
Tips for helping your budget go further
KEY GOAL: Shop around/compare the best flight/hotel prices and stick to that budget!
After the trip:
If any of these ideas or tips sound interesting to you, but you're unsure of how to put it into action, don't hesitate to schedule a time to meet with us using the link in our navigation bar.