By Kyle at ViaTravelers
Don’t let your insufficient savings prevent you from taking a dream holiday. Read below to find out how to start a vacation fund today.
Do you often imagine yourself taking a vacation from your busy schedule, but a lack of funds overwhelms these thoughts? Who doesn’t want to soak in the sun, feel the pleasant breeze and enjoy their favorite drinks in a holiday resort?
We all do, but some of us don’t prepare well for our dream vacation and always end up either working more or ranting about our financial crisis.
However, how would you feel when we tell you that you won’t have to sacrifice your plans for an ideal holiday with a vacation fund? This fund allows you to follow the path of vacation freedom and utilize your holiday days as you like.
If you are new to this phenomenon, we are here to help. So dig into this article for a detailed explanation of vacation funds.
Besides, we will also guide you on how to start a vacation fund so you can initiate your holiday planning right away.
What Is a Vacation Fund?
The heading says it all. A vacation fund is an account designed to save funds for your holidays. It is a savings account that isn’t used for any other purpose except to provide funds for your vacations when the time is right.
The amount saved in this account is totally dependent on your efforts and saving strategies. However, the funds collected in this account should be a proportion of your overall financial budget. You can also think about the travel rewards points from credit cards as a part of your funding sources for your trip.
Benefits of a Vacation Fund
Having a separate savings account for your holiday funds has many benefits.
For instance, it isn’t easy to collect funds for massive purchases such as a holiday in a resort or using Booking to stay at a luxury vacation rental. It requires lots of time and patience.
But with a vacation fund, you can plan well and enjoy a getaway that you can conveniently afford. The funds collected in this savings account help you to reap the maximum benefits of a well-deserved holiday.
Below are some other ways in which a vacation fund may work for you:
Visible Progress
Do you lump all your savings in a single account?
If yes, how do you separate the amount saved for a vacation from the money collected for emergencies?
Isn’t that a hassle every time?
By keeping your vacation money in a particular fund, you not only have easy access to your funds but also can evaluate the visible progress of the account.
Moreover, a vacation fund keeps you motivated every time you add some amount to the balance.
Specific Goals
Without setting specific vacation goals, you won’t feel inspired and motivated to take an actual holiday anytime soon.
And that is why you need a vacation fund. This savings account helps you set clear goals from the very start, and thus, you feel a constant motivation to utilize it with dedication.
The money saved in your vacation fund is separate from the funds required for your daily expenses. It means that these savings are out of sight most of the time.
As a result, you don’t feel tempted to spend it on anything other than a good holiday which helps you meet your vacation goals quite quickly.
Helps Maintain a Safety Net
Have you ever tried to use your emergency funds for a vacation? Unfortunately, that’s what most of us end up doing when there are no specific savings for a planned vacation.
An emergency account is supposed to cover your unforeseen expenses, such as unexpected medical bills. It is not designed for a holiday that you always wanted to take but never saved any funds for.
A vacation is not an emergency expense and so funding it with an emergency account is off-limits. That is why you should get a separate savings account to save for your vacations and use the money whenever required.
Prevent Vacation Debt
No one likes to enjoy a vacation using their credit card and then worry about paying the accumulated interest after the good time is over. If you hate that too, having a vacation fund will help you be your own sponsor for your dream holiday.
Besides, suppose you still choose your credit card to pay off some holiday expenses. In that case, you can use the money collected in your vacation funds to pay off the debt right away and save yourself from any unnecessary interest. You can then build rewards points from Hotels.com to save even more on your future travels down the road.
How to Start a Vacation Fund
We hope that the above information has convinced you to open a vacation fund. So, here are some steps that will help you do that:
Open a Savings Account
If you want your vacation fund to thrive and grow, you need to open a savings account. You can either open an account with your existing bank or choose any other bank to benefit from its high-yield account. A high-yield account for your savings helps you earn substantial interest than most other ordinary savings accounts.
This process requires lots of homework and research, so make sure you are ready to put in that effort. First, go through the interest rates and services that every bank offers. In addition, look for banks that demand a minimum deposit or balance to save you from any monthly charges.
Interestingly, some accounts have goal-setting features. Besides, many come with the facility of naming them. Such properties add more to your motivation and enthusiasm, which inspires you to save more.
Provide Identification
If you choose a new bank to set up a vacation fund, you will have to show your proof of identity before opening a savings account. For instance, most banks will ask you to provide your passport and driving license.
Moreover, some banks will demand your physical presence to start a vacation fund. However, if you are a busy individual, choose a bank that can help you make an account online without wasting your time.
Initial Deposit
Once you have successfully opened an account, you can freely deposit an initial amount. However, as stated earlier, some banks would want you to deposit a minimum amount before you take control of your savings accounts.
You can always opt for the automatic transfer feature for your consistent savings. This way, you will automatically have a specific amount of funds in your account at all times.
You can open a vacation fund at any time. This means that even if you plan a holiday next year, you can open a savings account today and save enough for your big-budget plans.
The best way to choose a date for starting a vacation fund is by creating an estimation for your total trip expenses and then dividing the amount by your expected monthly savings. The result will be the number of months you will have to save in advance to meet your holiday targets.
Ways to Grow a Vacation Fund
The above section covers how to start a vacation fund. Now let’s assume that you have one already but are unable to grow it to achieve your saving target. In that case, keep disappointment at bay and follow our tips below:
Spend Less
That’s quite obvious, right? Spending less means saving more which will help your vacation fund thrive. Here are some ways in which you can reduce your spendings to a great level:
Do you pay for a monthly gym subscription but have never stepped in a gym more than twice every month? Does your Spotify use justify the amount you pay for its premium subscription?
Cancel all such subscriptions that do not add value to your life. Instead, save the money in your vacation funds. Buy in bulk so you can benefit from a bulk discount. While this strategy may not work for every purchase, you can always buy a few packs of tissues or bottles of shampoos within a single store trip.
Look for better deals and save lots of money. Before making a purchase, google the available deals on a particular product so you can benefit from good discounts.
Recalculate your daily expenses every week to maintain your monthly expenses. To make this task easier, you can use an authentic budgeting app to monitor your income and expenses quite closely.
If you live in a beautiful city and like to visit different places, try the spots with free entries and save the money you might spend on the tickets. Or if you are in no hurry, wait till you are back from your dream holiday and then spend money on places you want to see within your city.
Include travel savings as part of your financial strategy so that you are always aware of this fund. It is essential to keep you motivated and aware of your goals. Besides, this way, you will be in a much better position to prepare a realistic monthly expense budget.
Find a Source of Passive Income and Earn More
If your current job can only fund your daily expenses, look for other sources to earn a passive income.
Invest in a cashback card and make all your payments through it. This way, you will earn a few rewards that you can use to fund your vacation savings account. A cashback card is an excellent alternative for a debit card with the added advantage of earning rewards.
Downsizing can help you fund your holiday. You can achieve that by selling off any old collectibles on different forums to earn an income for your vacation funds.
Apply for different online gigs and side hustles to earn money from home without leaving your safe space. Freelancing jobs such as virtual assistance, content writing, and graphic designing can help you earn extra. However, before landing on a gig, make sure you have the right set of skills that can help you with your new job.
If you have a spare room in your residence, rent it out to earn a monthly fixed income and add that amount to your vacation fund.
Final Words
So, after reading this article, what are your views on a vacation fund? If you have been planning to go on a trip for a long time but never saved enough to enjoy a carefree holiday, a vacation fund may help you do that now.
Having a separate account for your vacation savings helps you stay motivated to achieve your holiday goals. Besides, it saves you from taking a debt that you might regret after the trip is over.
In this article, we have covered how to start a vacation fund. So, if you want to go on a holiday next year, follow the steps above to treat yourself with a well-deserved break.
Author Bio: Kyle Kroeger is a travel blogger for his site ViaTravelers.com. Via travelers is a modern travel blog providing the best tips, hacks, and itineraries to ensure you have an amazing adventure. Follow ViaTravelers on Instagram, Pinterest, Facebook, and YouTube to get the latest travel updates in real-time.