We are about to knee-deep in summer vacation season.
July, the busiest air travel month of the year, is a little more than a month away and you may be trying to sneak in a last-minute trip.
Everyone needs some downtime to refresh and recharge. But from a financial standpoint, splurging too much on a vacation can definitely hurt an individual’s or family’s bottom line the rest of the year.
We sat down with Amy Peek, accountant and owner of Pittsburgh-based accounting firm Peekz ConsultiN, to talk about the green side of vacations:
WHO SHOULD TAKE A VACATION?
Before planning a vacation, Peek encourages clients to take a few things into consideration.
Do you have enough money in your household budget to meet basic needs, like child care, gas, food and parking? Are you saving enough each month for insurance, retirement planning and higher education?
If you answered yes to all of those questions, then you should be in decent shape to start planning a vacation.
HOW MUCH IS A REASONABLE AMOUNT TO SPEND ON A VACATION?
Peek says if you are doing all of the above, are no longer adding to your debt and are paying it down, plus have an emergency fund — at least four months of your living expenses — tucked away in savings, you should be able to safely allocate 5 to 10 percent of your yearly budget for a vacation.
WHAT IF I’M NOT IN A FINANCIAL POSITION TO TAKE A VACATION, BUT HAVE TIME OFF COMING UP?
If money is tight or you haven’t reached your savings goals, consider spending your vacation days with family or friends doing activities with little to no cost as an alternative to an expensive trip.
Peek recommends outings like “going to the local pool on a Wednesday or putting a puzzle together, a picnic at a park, go camping/hiking, watch a movie, play games. Have a baking day and teach your kids or partner how to make something to eat.”
WHAT ARE SOME OF YOUR TIPS FOR SAVING MONEY ON VACATIONS?
Peek recommends checking out online travel deals or signing up for emails and newsletters for the attraction you want to see so you’re in the loop about sales and other promotions.
The key is to plan ahead.
“This can be the biggest saver over all,” Peek said. “You will have less surprises and less cost.”
You can also save money by limiting your travel distance or taking trips during the off-season to avoid paying premiums during peak periods.
WHAT ARE THE THREE BIGGEST MISTAKES YOU SEE INDIVIDUALS MAKE ON VACATIONS FROM A MONEY PERSPECTIVE?
- They don’t plan ahead
- They have no budget
- They have no emergency fund to help when the whole trip gets derailed.
ANY OTHER TIPS?
“Please always call your credit card companies and see what travel benefits they offer,” Peek said.
They may include trip insurance when you book the plane ticket with your credit card or they include rental car coverage in case of an emergency.
And don’t forget to include loved ones in the vacation planning stage.
“You may want four days away from your annoying coworker, but the kids really just want to spend the whole day at the lake, and your partner could just sit on the couch — so, take a long weekend and the kids to the lake, if that’s what everyone wants,” Peek said. “You might even be able to do it several times on the summer vacation and didn’t have to break the bank to do it.”
PHOTO CREDIT: Ocean City, Maryland (by Alyson Raletz)
Peekz ConsultiN LLC is a Pittsburgh-based accounting firm, located in the West Side, that caters to individuals, small businesses and nonprofit organizations. We aim to empower clients to help them take control of their finances and achieve their dreams.