Do You Need a Financial Detox? 6 Steps to Get Fit for Summer Vacation
You’ve heard about mental health detox. How about financial detox? It’s almost summer which means it’s the best time to travel and make your dream vacation come to life. And yes, it’s not yet too late to save up for your 2018 summer trip. All you need to get is some financial detox.
We all have some bad money habits that we all want to break. But just like most aspects of our life, change is not always easy.
Nonetheless, it’s still possible.
The first step is to determine what you are trying to give up. Do you struggle with overspending? Do you often end up spending money on things that you don’t need? You’re not alone. According to a study, Americans are not experts at managing their finances. A third of higher-income households, particularly those who earn $75,000 per year, live paycheck to paycheck. What’s more – 34% of Americans have no savings at all and 69% have less than $1,000 in their emergency fund.
Tips to Get Financially Fit for Summer Vacation
1.Create a spending plan
One of the most important money habits that you should learn is creating a spending plan, whether you’re going on a trip, investing in a business, moving to a new place, etc.
When creating a spending plan, three major factors to consider will be your transportation, accommodation, and food. It’s a great idea to research about the place you’re going to have an idea of how much these things might cost you. Do not forget to include in your budget your travel activities (entrance fees to parks, resorts, and other entertainment areas), as well as shopping.
Having a plan helps you stick to your budget and ensures that you don’t overspend. Travel expenses depend so much on how you like to travel so it is important to make a travel budget early on.
2. Determine your PYF percentage
Pay Yourself First (PFY) is regarded by experts as the golden rule of personal finance. This is the practice by which you set aside a portion of your income for your savings before you start spending. Once you deducted your PYF percentage, set aside money for the bills – rent, payment for your personal loans, utilities, and more.
It’s up to you to decide your PYF percentage. However, if you really like to gain momentum, you should make it at least 10%. This means that even if you’re having additional expenses in your next travel adventure, you won’t have to worry about your savings because you already set aside money for it.
3. Research your destination
It’s always good to be prepared. To stick to your budget, research your destination ahead. Find hotels that match your budget. If you want to save on food expenses, consider looking for hotels that include free breakfasts. You may also opt for an Airbnb accommodation, which gives you cheaper options. Rental apartments with access to kitchens where you can cook your food can also help you save money. Plan out your itinerary very well so that you don’t waste money on transportation, unnecessary bookings, and other expenses.
4. Figure out if you can share vacation expenses with others
If you’re traveling with other people, there’s a good chance that you can save more money. Many hotels and recreational centers offer discounts for groups. Talk to your travel buddies about whether you’re all sharing the vacation expenses and how you’re all going to do that.
5. Set a different savings account for vacation
It’s always a great idea to create separate savings accounts depending on your financial goals – education, emergency, personal savings, etc. If you love traveling, you should have a vacation fund. Not only can you make sure that you’re saving money monthly for your next trip, it also reduces the chances of you taking money from your savings account just to have enough budget for your vacation.
6. Use travel rewards/credit cards
Taking advantage of credit cards’ reward systems is one of the best ways to travel for less. Most credit card companies offer travel rewards. Check with your credit card provider to learn about these rewards and promos. You can save a lot of cash, and can even get discounts on your flight, hotel booking, and vacation shopping.
If you haven’t traveled for the last few years, saving money for travel is something you should consider. You need not be earning 5-6 figures to be able to experience your dream vacation. All you need to do is plan ahead, save, and be more frugal. Hope you find these financial detox tips helpful not only in planning for your next summer trip, but also in becoming more in control of your finances.
About the Author:
Lidia Staron has been working as a writer, editor and literary coach for 5 years. She contributes articles about the role of finance in the strategic-planning and decision-making process. You can find really professional insights in her writings.