Personal Finance Advice

Not everyone heads off to exotic locations when vacation time rolls around.  Many people use vacation time as an opportunity to visit family and friends who don’t live nearby.  Most vacationers think of this as a way to get away from home while not spending too much money…or at least not as much if they had hopped aboard a cruise or flown to a tropical beach somewhere.

Don’t underestimate the amount of money you’ll spend traveling.  Even if your vacation is only taking you into the next state over, you’re still inevitably going to run into plenty of opportunities to spend more money than you originally intended on spending.

For example:

You drive instead of flying.  Flying can be quite expensive, and it can also be a pretty big hassle with delays, security checks, and all the other situations you may encounter whenever a trip to the airport is involved.  Don’t assume that driving can be the sure-fire solution to saving money, however.  Take into consideration the amount of money you’ll spend in gas and the wear and tear on your car.  If you rent a car, consider all the added expenses with this.  Don’t forget that flying has one big financial advantage over driving: When you’re driving you can stop at convenience stores and load up on expensive treats, but with an airplane you’re pretty much confined to overpriced cocktails and meals that are easy to refuse.  

You buy food from a local store instead of eating out.  Once you get where you’re going, you plan on heading to the local grocery store and getting all the food you need for your stay.  Before you budget for this particular vacation expense, make sure you’re familiar with the cost of living of the area you’re visiting.  You can’t just budget the same amount of grocery money you use while at home if you’re visiting a location where things cost more.  A vacationer from the Midwest visiting Los Angeles, for example, will probably be appalled to discover the higher cost of groceries.  If the vacationer doesn’t budget properly for the addition costs then money will run out much more quickly than originally anticipated. 

You use cash instead of credit cards.  You make the wise decision to avoid putting vacation expenses on your credit card, but you’re reluctant to carry a huge wad of cash around in your wallet.  That’s a smart decision too, but it leaves you with the choice of either using your debit card for all your vacation purchases or to instead pull cash from an ATM every time you need it.  If your plan is to use cash as a budget tool then you may find that you spend a lot of money in ATM fees.  You may be fortunate enough to have a financial institution with ATMs peppered along your vacation route or maybe your account refunds foreign ATM fees.  If you’re like most people, however, ATM fees will pile up quickly and relentlessly.

This isn’t to say that these are bad vacation moves.  In fact, you can save a lot of money using these methods.  The trick is to use them in ways that actually save you money.

Always compose a budget before heading off on vacation, and always leave some wiggle room.  Even with the best intentions, most people usually spend more than they originally thought they would while on vacation.  If you think you’re going to spend $500, budget for $750.  If you think you’re going to spend $2500, budget for $3000.  It’s far better to budget beyond what you think you’re going to spend and then potentially have some money left over instead of not budgeting enough and winding up pulling out your credit cards to cover expenses.