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Save For Vacation Of Your Dreams

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By Jean Chatzky

Published: January 20, 2008

I spent my holiday vacation in Costa Rica. That's not the norm for my family, but I decided it was time to round up the kids and take them on a trip that would be fun, educational and a little adventurous. No more lying on the beach - we went rafting, zip-lining and camping.

As soon as I decided this trip was among my goals for the year, I started planning: surfing the Web, calculating costs and plotting where the money would come from.

I wanted to avoid the traditional post-vacation hangover. You know the feeling: You return from your break not refreshed but stressed out about blowing your budget to pieces or racking up massive credit-card debt.

If you're planning a vacation for this year, take the time now to scope out deals and approximate what the final tab will be and start saving. If you start planning now, you'll be able to enjoy your vacation knowing you have the money to pay for it.

Scout for deals. It's all about doing your research. If you hop on the computer, you can compare similar locations, flights, hotels and car rentals to find out where your dollar will stretch the furthest. You can also compare the cost of leaving on a Friday with a Saturday (hint: A Saturday flight is almost always going to be cheaper) or a morning with an evening.

"A lot of it is educating yourself and spending the time finding deals. You don't need to book early, but you should start gathering the data as early as possible," advises Fiona Lake Waslander, director of travel for Yahoo.

Once you've chosen a destination, pick a date that gives you enough time to save but not enough to procrastinate. Then estimate the cost. Add in money for souvenirs, extra fees, taxes for airlines and hotels, and gas for a rental car. Once you have a ballpark figure, add another 5 percent to 10 percent in case you go over. If you come home with extra cash, all the better.

Focus on your goal. If you want the strength to say "no" to that new dress or your daily cappuccino, you need to have a bigger goal to focus on. Every time you have the urge to whip out your credit card, picture yourself on the beach in Costa Rica.

Find extra cash early. Cutting small things from your budget over six months or a year is a lot less painful than spending the month before your vacation on house arrest to save at the last minute. Not only that, but also the earlier you invest your savings, the more interest you'll garner, and that's free money.

If you receive an extra chunk of money throughout the year - a tax return, a bonus, a gift from a family member - and you're all set where your debt and retirement savings are concerned, go ahead and stick that in your vacation fund as well.

Make it automatic. Once you've cut the fat, come up with the amount you can put away each month for your vacation fund. Set up your bank accounts so that amount is automatically transferred monthly from your checking account to your vacation account.

Not only does this allow you to put the whole savings process out of mind, but it also takes the cash out of your hands before you have a chance to squander it.

Use your points. If you're a frequent traveler, you likely have miles and hotel points saved up. Why not use them? Loyalty-program points will reduce the out-of-pocket cost of your trip, and the savings can add up. Call airlines and hotels instead of booking online for the most success.

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