It may only be April, but it’s never too early to start planning for your summer vacation. With summer less than three months away you should start saving today, especially if you’re looking for something a little more exciting than a staycation. A new study from TD Canada Trust finds that although 90% of Canadian families want to take a vacation this year, almost half – 49% – won’t save enough for their trip and will instead rely on credit cards and lines of credit to fund their vacations. While there’s no denying a luxurious family vacation is a lot of fun, it’s no fun receiving your credit card statement and wondering how you’ll ever pay it off.
For the 49% that don’t save enough for their vacation, 35% will only save part of the cost, while 14% won’t even save a dime, relying solely on credit. As consumer debt continues to skyrocket, interest rates will eventually increase - and that will really hit home if you have an unpaid vacation languishing on your credit card.
Saving for your family vacation requires financial discipline, according to Stephen Menon, Associate Vice President of Credit Cards at TD Canada Trust. “How can you avoid taking on more debt to fund a family vacation? It comes down to saving early and budgeting accurately,” he says. “There are roughly 16 weeks until August and with careful planning, it’s possible to start saving now for a debt-free family vacation this summer.”
Although setting a financial goal and sticking to it is never easy, there are ways to make saving easier. TD has a three-step plan for Canadian parents to save and budget to ave a debt free vacation.
“Planning an affordable family getaway starts with calculating the full cost of your trip and creating a budget,” says Menon. “Include all the costs associated with your trip, from flights and hotels to tips and souvenirs.”
The poll found that shopping (46%), taxes and fees (39%), and food (38%) are the top unbudgeted expenses. Although often forgotten, these expenses can really put a dent in your budget.
“Most parents may not be able to start now and save enough for a European family tour this summer, but a long weekend away or cabin rental by the lake may be possible,” says Menon. “Be realistic with your budget, and break it down into manageable amounts leading up to your trip.”
Reaching a savings goal is all about setting a realistic timeframe with a set dollar figure. For example, by saving $37.50 weekly for 16 weeks you’ll have $600 – enough for a weekend stay at a luxurious hotel. If you’re looking to get away, by saving $125 weekly you’ll have $2,000 – enough for a flight for four to prime destinations including New York, San Francisco and Vancouver.
Are you saving those Air Miles points for a rainy day? There’s never a better time to cash them in than a family vacation. Credit cards including the TD First Class Travel Visa Infinite Card let you redeem points to cover travel costs. Canadians are savvy when it comes to rewards, taking full advantage of their travel rewards: the TD study found 46% cashed in their travel rewards last year, while 39 collect rewards before travelling to that exotic destination. It’s a shame we aren’t as disciplined with our savings.
Tammi Roy, My Organized Chaos parenting and travel blogger, is an expert on living frugally. She says the key to stretching your family travel dollar further comes down to budgeting. “My best advice would be to look at each and every expense and ask yourself, 'How I can reduce this cost?'” says Tammi. “The answer could be coupons, 2 for 1 deal, and reduced rates when booking another needed item and attraction.”
Air travel isn’t cheap, especially during peak travel times like summer. So how do you get a good deal on a flight? “I always let the costs/airfare rates guide our decision,” says Tammi. “For instance, I choose the best date for us to go and then search for the hottest deals that just can't be passed up. Not only does this save a lot when it comes to especially airfare, it also instills new adventure and excitement in travelling.”
If you can’t afford a trip to the top travel destinations like Europe and Australia, there are still plenty of great places to visit in Canada. “When travelling within Canada, local is generally cheaper unless you score that great deal on airfare or accommodations,” says Tammi. “Weigh the pros and cons of each destination, price out the costs of flying versus driving and see what works best for your budget. If driving, take note of all the places of interest to stop on the way, yet don't forget to factor in those associated costs in your budget.”