February 1, 2008 in Personal Finance

In a perfect world, we’d all have fully funded vacation accounts to pay for our annual family getaways. The reality: Most of us are just now starting to think about this summer’s vacation. Here are some fast-track ways to save for your big trip.

1. Start with a spending plan

Decide upfront how much you’ll spend on your vacation. Get specific.

Along with plane tickets (or gas, if you’re driving) and hotel prices, guesstimate costs for meals, souvenirs, and park or museum admissions. Total it all up. If the number sends you into shock, cut back on costs — now, on paper — until you feel comfortable with what you’re spending. If money is really tight, consider a couple of long weekend trips instead of one “dream” vacation this summer.

2. Sacrifice now for fun later

Do you belong to a health club or subscribe to a service (such as cable or satellite TV, a cell phone plan, etc.) that you no longer use, or could easily downgrade?

“Drop the service now and stash the money away for your family’s summer vacation,” says Kim Danger, founder of Mommysavers.com. Also consider cutting back for a few months on nonessentials like kids’ dance lessons, your weekly Pilates classes, your husband’s trips to the batting cage or your family’s monthly movie-rental service.

Remember: You’re just trading today’s fun for the fun you’ll have during your vacation. Move what you normally would have spent on these items into your vacation fund. Ideally, that would be a special savings account or an easy-to-track category within your larger savings account.

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3. Build cash with a ‘Pantry Week’

For one week each month, from now until your trip, stay out of the grocery store and eat only what you have in your house. Mary Hunt, founder and editor of Debtproofliving.com and author of “Live Your Life for Half the Price,” calls this quick money-raising challenge the “Pantry Week.”

Make it fun by pretending you’re on a deserted island and can only eat what you have in the pantry. What unusual meals can the kids suggest? “Most families have more staples in their cupboards than they realize,” says Hunt. And guess what? It’s actually OK to eat peanut butter and jelly for dinner one night.

4. Eat out less, save big

A typical family with kids younger than age 6 spends an average of $239 each month on restaurant meals, according to the National Restaurant Association. That’s money that could easily be diverted to your vacation fund.

Some ways to cut back without going cold turkey: Check local restaurants for “kids eat free” nights (often Monday or Tuesday nights), watch newspaper coupon inserts for buy one entree, get one free dining deals or buy discounted coupons (usually $25 certificates for $10) at Restaurant.com.

Frozen dinners or ready-made grocery deli items are much cheaper than restaurant food if all you really need is a cooking break. You could also eat dinner inexpensively at home, then treat the family to a modest dessert out.

5. Make a savings wall chart

Kids are more likely to get excited, and you’ll stay on track more easily, if you make your savings goal visual. Chart a graph on a large poster board. Track your weekly or monthly progress toward your trip savings with colorful markers and stickers.

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Set some milestones along the way: For instance, once you’ve saved one-quarter of your trip costs, celebrate with a special movie-at-home night or go out for ice cream. Celebrating your success makes the savings process fun.

6. Sell your stuff

A garage sale is a great way to earn vacation cash from your castoffs. To attract a crowd, run an ad in your local newspaper and post easy-to-read signs around your neighborhood. Check local regulations about posting notices, of course, and write signs in crayon if it looks like rain.

Sales tips: Kids’ clothes sell well at yard sales, adult clothes don’t — try a consignment shop instead. List kids’ clothing sizes and brand names, if you have them, in your ad. Some parents make special trips to garage sales featuring labels like BabyGap and Gymboree, says Danger.

If your kids are old enough to help, let them pick some of their older toys to sell, suggests Dave Ramsey, author of “The Total Money Makeover.” A special kids’ table with a sign like, “All proceeds go to purchase of our Disneyland souvenirs,” is often a big hit — and it’s a great way to teach your kids about money.

7. Use your tax refund — now

Do you usually get an IRS refund in April? If so, too much tax money is being withheld from your paycheck. Fill out a new W-4 form with your employer right away. Adjust your tax withholding so that it’s fairly close to what you will owe in April.

Your next paycheck should be substantially bigger. Start transferring the extra money into your dedicated vacation savings account or category. If you still get a refund this spring, sock it away, too. Heather Larson of Tacoma, Wash., puts her family’s refunds into short-term certificates of deposit that expire right before their vacation. That way, they don’t spend the money on anything else. You can locate the best rates in your area on Bankrate.com.

8. Let credit cards pay you back

In the months prior to your vacation, use a credit card that accumulates “rewards”(points or cash rebates) for everything you can: gas, groceries — even day-care tuition.

Let rewards pile up, then use them toward plane tickets (if you’ve been banking points/dollars for a while), hotel or rental car discount, or gift cards for chain restaurants you’ll visit on your trip. You can locate and compare rewards cards at Bankrate.com. The key, of course, is to pay off your balance in full every month. Vacation debt is not the kind of souvenir you want to collect.

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