personal finance tips

Every year you have promised yourself that the next year would be the year you go on your dream vacation. However, every year something happens that depletes your finances, rendering your vacation dreams impossible. As with everything else in finances, saving for a vacation requires planning and forethought. Here are some steps you can take to make your dream vacation financially possible.

Create a Bank Account Solely for Your Vacation

One of the easiest ways to save for vacation is to create a dedicated vacation savings account. If you choose a savings account that has a high yield interest rate, you might earn a little extra money while saving for your trip.

Instead of using the same bank you have for checking, think about using an online bank. This way, it will be harder for you to withdraw the money and easier for you to save. Set up an automatic deposit into your new savings account. Use bonus money or extra cash given as gifts and deposit it into your vacation fund.

Create a Savings Goal

Without a savings goal, your dream vacation is just that, a dream. Set a budget for your trip in advance. Research how much you will spend on expenditures, including car rental, airfare, souvenirs, meals, etc. Then tack on an additional 10 percent for unexpected expenses.

Once you have that total, divide the total by the number of months until your vacation. If your vacation is two years away and is going to cost you $5,000, you know you are going to need to save around $200 a month.

Or let’s say that your vacation date is not set in stone. Look at your budget and determine the amount of money you can reasonably save. Then, look at the end cost of the trip. Take the trip cost and divide it by the amount of money you can save every month and that will give you an estimate of around when you will be able to take your trip.

Make Investments Work for You

Annuities are a type of insurance contract that will make regular payments to you, either now or at some point in the future. You can purchase an annuity today and fund it so that it will grow. By the time you reach retirement, you will have a guaranteed income.

You can also sell an annuity to an annuity buyer. To do this, you would research annuity buyers, receive a quote, talk to your legal representation, and submit the required paperwork. The case is presented before a judge for approval, and then you will receive payments. For some, this is a nice way to take advantage of financial resources to fund the vacation they have always wanted.