Start saving now for your summer vacation

Your toes are wiggling in the warm sand as the gentle surf teases the shoreline. Mickey Mouse is waving "Hello" to your little girl. The gondolier is singing Italian songs down a Venetian canal. We all dream of the perfect vacation, but the real thing requires... money!

Have you been saving for vacation?

Even in today's shaky economy, a financially healthy household operates on a budget, and an important part of every budget should be vacation. We work hard and deserve it. What happens if we don't budget for vacations? We end up putting it on our charge card... AND, you know where that leads!

Ooops - I forgot to budget for my vacation!

Then, start today! Cut out the gorgeous picture of your dream vacation from the magazine and tape it to the fridge. Then, sit down and decide how much you'll need to make that dream vacation a reality. Figure in airfare, car expenses, lodging, meals, entertainment, etc (There's usually a lot of "etc!") When are you going? In six months? Nine months? Do the math to determine how much of your monthly paycheck will need to be saved in order to reach your goal by vacation time. Be sure to factor in that vacations always cost way more than we've figured. Remember too, you'll need some of that money ahead of time for things like hotel deposits.

Saving for vacation with a "Vacation Club Account"

Once a realistic monthly vacation budget amount has been determined, open a bank account. (Saving under the mattress is too risky, as well as too lumpy.) Many banks offer "Vacation Club Accounts." The requirements on these accounts vary from bank to bank, but usually ask for a starting deposit of as little as $5 and pay interest equal to a standard savings account. There is no monthly fee and the account can be set up as a direct deposit.

Saving for vacation with a "Money Market Account"

While at the bank, inquire about a money market savings account. This type of account doesn't carry the name vacation on it, however usually will offer a slightly better interest rate. A higher rate of return will mean an extra couple of dollars in your pocket for vacation. If a money market account is the decision, be sure to set it up as a direct deposit.

In either case...

It's important that the vacation club or money market account be set up as an automatic direct deposit. Life gets busy and it's only human to forget. Direct deposit assures the amount you budgeted for this vacation will, indeed, be saved from your monthly paycheck.

Saving for vacation is ongoing

You've probably figured by now that if you had started saving for this vacation last year, the monthly outlay would have been far less and a lot more would be saved by now. This is why saving for vacation should be a yearlong budgeted amount. The money will always be there when vacation time arrives.

What about next year?

Relax and enjoy the pictures and memories.
Let a month go by after returning from this vacation before thinking about the following year. (The cloud of the expenses just laid out for this year's vacation too soon will mar thinking about next year's vacation.) Then, take out pen and paper and, once again, begin estimating expenses for the next vacation. Of course, the many variables from one vacation to another need to be considered when estimating anticipated expenses. Things like... Continental US or out of country... fly or road trip... budget motel or high end hotel... kids or no kids, etc. Finally, readjust the monthly automatic deposit amount to reflect estimated expenses for the new vacation.

Now you know - Saving for vacation is as easy 1, 2, 3 and 4!

1. A vacation picture is taped to the fridge.
2. A realistic estimation of anticipated costs has been done.
3. An automatic deposit savings account is in place.
4. Money is being deposited into the vacation account monthly!

All is in place! It's as easy as that. Now…You can sit back with a cool drink and return to those visions of white, sandy beaches and palm trees.

More vacation tips:

Tips hold down vacation costs 
The benefits of staying local for cheap vacationing 
6 Budget-saving tips on planning your honeymoon
Maui on a Budget 
Tips for traveling to London with kids