The secrets to successfully budgeting for a summer vacation

It’s summer, and for Canadians thawing out from the harsh winter, that means taking full advantage of the great outdoors. Summer is the perfect time for travel – the kids are out of school, the roads are dry and the destinations are scenic. However travelling, accommodations and souvenirs can come at a pretty penny.

The cost of gas, flights, food, hotels and “I love P.E.I.” t-shirts can really add up, especially for a family of four or more. So how can Canadians enjoy their summer vacations without feeling the lingering effects of the dreaded “travel-debt hangover?”

Be Proactive - Pay Yourself First

Wade Stayzer, Vice President of Sales and Service for Meridian Credit Union says the best thing people can do to prepare for a summer vacation is to “pay yourself first” by being proactive and saving up the funds for the vacation well in advance.

“When we talk about being proactive that to me suggests that you’re planning far, far ahead,” Stayzer says. “If you know that you’ll be doing a summer vacation every year, then that should be part of your ongoing savings, not just two months before.”

Stayzer suggests setting up an automatic savings plan with your financial institution to automatically draw funds from your account directly into a savings account before you have time to consider spending the cash on other things.

“If you do it right, it really can help you with the other elements of your life because summer is just one chunk of the year,” he says. “The last thing you want is come September when kids are going back to school and you have a big debt load that you have to pay off because guess what’s right around the corner from there? Christmas debt.”

Stayzer also suggests setting extra funds aside, such as a cost of living or an annual raise to help pay for the fun things in summer.

“Say if you get $50 more a week or $100 more a month then, if you were able to live on that the year before with your regular pay, put whatever is new into a savings vehicle.”

Be Realistic

Preparing a summer vacation budget requires taking account of all aspects of the vacation, not just the big ticket items like the cost of travelling to the destination and accommodation.

“Budgeting is not rocket science,” Stayzer says. “If we talk about one of the biggest pitfalls when it comes to budgeting it would be that people are not realistic with what they put down. They either miss elements like travel or other key elements when it comes to maintenance of a cottage or that sort of thing. I think that if you are guided by the principle of ‘if something is worth having, it’s worth saving for,’ you’ll be ok.”

You Can Use Credit, But Wisely

Credit cards can aid your summer vacation plans greatly, especially if the card offers travel rewards, however consumer beware: If you don’t pay the balance off, you risk paying way more in interest charges.

“As long as you use your card the right way – which is you put purchases on the card and pay them off,” says Stayzer. “If you’re running a balance on your credit card but justify it by saying ‘yeah but I’ve got points,’ you’re really costing yourself because what you’re paying in interest is likely to be the same as what you’re gaining in points. However, if you’re disciplined about it and putting your gas and groceries on your credit card and transfer over the money when you get home then you can win that way.”

Get the Kids Involved

When learning how to budget, it can be a huge advantage to start young. Finding a way to get the kids involved can lessen vacation spending while teaching them how to save early, all without them knowing they’re still being schooled in the summer.

“Find ways to get your kids to be a part of that plan,” Stayzer says. “That could mean having them use their own money for any of their purchases like souvenirs or sweatshirts. Even if that’s money that you’ve given them at some point – whether that’s allowance or whatever that may be, enlist them in saving for the vacation. What ends up happening is when they’re spending their own money you’re teaching them valuable lessons about priorities and they’ll actually be a little bit more critical of what their purchases are when it’s coming out of their own wallet.”

Oops I Went Over Budget – Help!

Having a rainy day fund can also prepare you for the dreaded unexpected costs while away, like that hand-crafted canoe that’s too good to pass up.

“There are a number of different rules of thumb – whether it’s two month’s salary or three months salary in case you need it, however not many folks have that. That can be a bit of a challenge,” Stayzer says.

If the challenge becomes too real and debt creeps up without having the means to pay it off when you get home, Stayzer suggests that if you’ve got a strong credit profile, a secured or unsecured line of credit is a good option to pay the debt off at a lower interest rate.

With a solid plan in place, summer vacations don’t have to break the bank. Fun in the sun can be achieved as long as you lather on some financial protection so you don’t end up getting burned.