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Are You Saving for This Potentially Large Expense?

By Maurie Backman - Jul 18, 2019 at 6:54AM

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It's a common one during the summer -- and a costly one at that.

It's summertime, and that means school's not in session, schedules are more flexible, and the weather is generally mild (albeit hot) on a nationwide level. As such, it's common for people to take vacation during the summer months.

If that's your plan, you may be busy researching hotel deals and booking different tours. But have you put any thought into how you'll actually pay for your getaway?

Ideally, the money for your trip should come from savings, and 18% of Americans say that setting aside funds for vacation is a top priority of theirs, according to CIT Bank's Summer Savings Survey. On the flip side, 36% of U.S. adults don't save anything for vacations on a monthly basis, and that's problematic when they move forward with travel plans despite not having the money on hand to do so.

Three people in hats standing in Bryce Canyon National Park.

IMAGE SOURCE: GETTY IMAGES.

If you're not in the habit of saving for vacations, you'd be wise to rethink that idea. Otherwise, you'll risk racking up debt in the course of escaping the regular grind.

Save now, spare yourself the stress later on

Vacations usually aren't free, and while there are things you can do to minimize their cost, for the most part, you need at least some money to pay for them. But if you don't accumulate any funds in savings, you'll risk racking up loads of credit card debt in order to get away. That debt will not only cost you money in interest, but potentially damage your credit score to the point where it's hard to repair.

A better bet? Set up a budget that maps out your monthly living expenses, and include a line item for vacations in there. Then, set aside funds each month so that by the time your vacation rolls around, you have a way to pay for it.

Furthermore, while it's a smart idea to sock away money for vacation purposes, you shouldn't tap your emergency savings to pay for a trip or getaway. The purpose of your emergency fund is to cover the cost of unplanned bills that can't be put off, like home or vehicle repairs. If you raid your emergency savings in order to pay for a vacation, you could wind up in a real pinch the next time an unanticipated bill comes your way.

If you've missed the boat on saving for a vacation for this summer, postpone your plans and travel later in the year, after you've had some time to accrue some cash. Or, take a staycation, and explore low-cost activities in your hometown. It may not be as exciting as traveling to a foreign country or even to another state, but you could very well end up enjoying it nonetheless.

Remember, the purpose of going on vacation is to have a good time and clear your mind. But if that vacation results in a host of financial problems, you'll wipe out those benefits. You're therefore better off actively saving to go on vacation, and waiting until you've accomplished that goal, before packing your bags.

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