Summertime is travel season for many. Kids are out of school, or home from school and the weather is nice. It’s a natural time for vacations and time off to do what you want.
And that’s a big part of the WealthyWellthy life – having a relationship and flow with your money to fund your life. Not just for show. But to use my money systems so that you can build wealth so you can experience life. And do what you want – including vacations.
Vacations are necessary. They are healthy. They are part of self care and staying healthy and an important part of enriching your relationships. This is also a common area where people go into debt – primarily credit card debt.
Here are some tips for how I make sure I enjoy my time away without breaking my bank account.
1. Earn credit card miles, but don’t use credit cards to pay for a life you can’t afford.
If you’re going on vacation, using credit cards to book and pay is standard. So you first want to make sure you aren’t carrying a balance and you’ve managed your personal debt before using credit. But once you’re debt-free, use credit cards that give you cash back or travel miles.
My flights for vacations each year are entirely paid by miles I’ve earned by using my credit card. Here’s why: I never carry a balance on my card. I use my credit card to earn miles and because it’s safer for online purchases than a debit card; but I never use it to pay for things I can’t actually afford. This practice allows me to easily stay within budget (since flights can usually suck up vacation funds).
2. Set a total expense.
First, identify the purpose of your trip: Is it to venture out and explore new sights? Is it to totally check out and lounge in peace? Based on your intentions, figure out the total amount of cash that you’re willing (and able) to spend over the duration of your trip. Commit to this amount and don’t exceed it — no matter what! This will keep you in budget but will also make you feel in control of your finances. It will eliminate the post-vacation panic and regret that comes from unconscious overspending on your credit card and the months of trying to pay it off with interest. Be realistic with your budget and how to maximize your experience without causing money stress down the road.
3. Always be saving up.
My Bucketing System, the money-mapping system I’ve created and follow religiously, consists of a series of “buckets” of money. I dedicate a set amount of my income into each bucket each month. One of my savings categories is for what I call “Dreams.” Cars, home improvements, and other large expenses fall into this category. My vacations are paid for in advance and in full before I even take them as a result of having the money saved in a specific “Dreams” bucket (we call ours the “Bucket List” bucket). It’s my method for:
Making sure I take vacations.
Making sure I don’t go into debt in order to do so.
Once you start using the bucketing system you can watch the money in your vacation bucket grow and know exactly when you’ll be able to plan and pay for the vacation you want. This gives you goals that you set up in advance and something to keep you accountable for in your spending. When you have something you’re looking forward to, it’s easier to stay on track with your spending because you have incentive.
4. Prepay if possible.
Whenever possible, use the funds in your “Bucket List” bucket to prepay your vacation. This will keep you from going over budget but also give you peace of mind while traveling when most, if not all, of your expenses have been paid for in advance outside of the spending money that you’ve allotted for incidentals.
5. Use money-saving apps.
Before overpaying for room and transportation, take advantage of the many money-saving travel apps. For example, I highly recommend using Airbnb over a hotel. Not only is it less expensive per night, it also saves you hundreds of dollars on restaurants–especially overpriced hotel restaurant meals and crappy food you grab while out and about–because you have a kitchen to work with. Not to mention you eat healthier (and less!). Drop by a natural grocer and pick up some healthy snacks and good dinner food.
Research the location that you’re going and look for travel apps to save you money on excursions, transportation, meals, etc.
6. Spend it all!
This is a little counter-intuitive and not usually recommended by a money coach, but…the money in your Dreams bucket is meant to be spent! So spend it! You don’t want to overspend, but you don’t want to have your entire vacation ruled by restrictions of extreme frugality. This is YOUR experience. Make the most of it within the guidelines you’ve been given. So, my rule is that I have to spend the money allocated for the trip. This allows me to not only keep my spending inside the bucket allowance, but also forces me to spend the bucket so that we get the most out of my savings.
7. Spend money on experiences… not stuff.
Don’t waste your money on overpriced souvenirs. Spend it on meaningful experiences. When you reserve your money for meaningful expenses, you usually have cash remaining by the end of the trip. And with the rule that you have to spend your bucket (above), this give syou the opportunity to spend what’s left over on things you might not normally splurge on… like hot air balloon rides or a nice piece of local art, etc. This is forced splurging, which feels good! But it’s all accounted for, so you don’t have to feel bad or guilty when the credit card bill shows up 30 days later.
8. Take advantage of the “you” time.
Your vacations can be a great time to check in on your long term goals. It’s a space, outside of the noise and responsibilities of “normal” life, to reflect on your feelings and desires. It’s also a perfect time to reflect on money, check on your buckets, your expenses, and establish specific money targets and financial goals.
If you plan in advance, follow a smart money system, and treat vacations as an important part of your health – you can use these strategies to fully experience the value of some time off. I teach more about this money system in my free training, The Millionaire Blueprint and help you learn how to set up and manage your money step-by-step in the Mindful Money course.
I hope you’re finding some time for some R&R this summer. Let me know what vacation plans you have this year. If you’re in the Mindful Money course and have been filling your vacation bucket, comment below on how you’ve funded this important part of your life with your bucket system!