No matter how inexpensive cheap airplane tickets, discount hotel rooms, and cheap vacation packages may be, there remains a financial cost that has to be addressed when planning to take a vacation.
The following are guidelines on how to pay for a vacation:
Avoid charging travel expenses on a credit card unless you are going to be able to pay the entire balance when due. Otherwise you may end up paying dramatically more (as much as 50 to 100 percent more) that the actual total cost of the trip. Similarly, avoid other types of borrowing such as taking out a home equity loan to pay for a vacation.
Many people have found that it makes sense to set up a vacation savings account whereby money is automatically deducted from paychecks or checking accounts each month. This is a great way to separate your vacation cash from money used to pay regular expenses and to keep it untouched until you need to pay for your trip.
Determine how much cash you want to save each month and then be diligent about sticking with your budget. Reducing daily expenses for nice to haves such as lattes is a relatively easy way to save for a terrific vacation.
A general guideline as to how much should be spent on a vacation is that it should cost about one weeks salary. The final number though is up to the individual and depends on fixed expenses, including housing, cars, student loans and insurance, as well as lifestyle choices.
The most common mistake in vacation budgeting is underestimating costs. Make certain your budget covers not only airfare and hotels, but also meals, cabs, shuttles, souvenirs, tips, and leave room for unexpected expenses, which experts have found can easily cost 25 percent more than other foreseen travel expenses.
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