Summer vacation savings plan: how to budget for a vacation

Taking a summer vacation is a fun and exciting experience for the whole family, but it can get expensive quickly. Fortunately, there are a variety of ways to get away and have a great time without breaking the bank. Here are some suggestions.

What is a vacation fund?

As the term implies, a vacation fund is a system of saving money for upcoming travel. There are several different ways people choose to store their fund money, whether saving with a separate account or simply budgeting into a personal account while tracking through a spreadsheet.

How do I start a vacation fund?

The first step will likely be deciding where you will store your fund. One option is a separate savings account. Everyone’s vacation fund will be different and how you accumulate money depends on how much you put into the fund. Once you open an account, you must determine how much money you need to save in your fund each week or month, and how long it might take you to reach that goal. A separate vacation savings account has a few great benefits:

1. It helps you accumulate money over time, instead of having to pay for a vacation all at once.

2. Having a separate account will help prevent you from spending that money on something else. As the saying goes, out of sight, out of mind.

3. It allows you to automate payments straight from your paycheck, making it an ideal, hassle-free saving spot. You won’t have to remember to add money to it every paycheck. After you determine where you’ll store your money, you should consider both how long you’ll save and the contribution cadence.

These last two steps will go hand-in-hand. Try to send a “due date” for when you will stop contributing to your fund. With that date in mind, consider how often you will contribute as you progress toward your goal.

What costs should be included in a vacation budget?

Everyone’s vacation preferences will be different based on where they’re traveling to and how they’re getting there, but there are a few universal things to consider when building your vacation budget:

Transportation costs

If you're traveling by car you’ll need to account for gas and potential parking fees. If you're traveling by plane, you’ll need to think about airfare, luggage fees, and potential airport parking fees or taxi rides to and from the airport. You can find the cheapest way to travel by using a fly or drive calculator, which can help you measure travel distance and time, and help keep your budget under control with travel cost tools. If you are traveling somewhere where you’ll need a car, be sure to also factor in the cost to rent a vehicle, as well as gas costs. It’s also important to check your car insurance and see whether or not it extends to rental cars. If you don’t own a car or your insurance doesn’t cover rentals, you may need to pay for insurance that will cover you when you drive the rental. If you prefer not to commit to a rental vehicle, you may be able to use public transportation. Another option is to take cabs, or use Uber or Lyft to get around. Those costs can add up quickly, however, so do a bit of research to see what the average fees might be to be transported around.

Lodging costs

Whatever accommodations you decide to stay in, you’ll have to account for the cost to stay at your choice of hotel, resort, AirBNB, plus tips and any associated fees for parking.

Food and drink costs

Whether you decide to dine out every night or stay in and cook, you’ll need to account for the price of food. The cost of alcoholic beverages, appetizers, and desserts can add up, so be sure to prioritize what’s important for you and have a plan.

Entertainment costs

Unless you’re staying in an all-inclusive resort, there will likely be a cost associated with activities you decide to do during your vacation. Make sure to factor in the cost of museum visits, amusement parks, concerts, souvenir shopping and more.

Pet care costs

If you have some furry friends at home and don’t have a family member or friend who can check on them, be sure to factor in the cost to have a sitter stay at your place or drop in each day. You may also choose to kennel your pet while you’re away.

Prepare for unexpected costs

Whenever you go on a vacation, it’s a good idea to have some extra money in your budget for unanticipated situations. Anything can happen on a trip, from the airline losing your bag, to your hotel making a mistake and misplacing your reservation, to suffering an injury. Having additional money in your budget as a cushion will allow you to deal with these potential situations and any costs associated with them. Whether it’s a bucket list trip, a weekend getaway, or a staycation with family, take the time to be present and savor what you saved for.

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Lyft, AirBNB, and Uber are independent companies not affiliated with Midland National®Life Insurance Company.

REV 5/2022