Step one: Add a new category to your budget
Treat your vacation as a category on its own when you are planning for the holidays. Calculate how much you expect to spend – include all expenses – and divide that amount by 12 (if you have to 12 months to save for it) to give you a rough idea of your monthly savings goal.
When calculating your total vacation budget, consider the obvious things such as airfare, gas, hotel as well as the incidentals such as meals, pet care and luggage fees. Review last years’ receipts or credit card statements for an overview.
Airfare can be hard to pin down since fares vary widely from airline to airline and season to season. You can gauge from the amount you spent last year or scan this year’s current ticket prices for your intended date and add an additional 25% on the fare as a “buffer”.
Step two: Start immediately
Like all things finance-related, the best way to enjoy an indulgence is to plan way ahead. The best way to get a head start is to set aside money now. Within a year you will have a full 12 months to master this strategy and come vacation, you’ll be able to pat yourself on the back.
Step three: Live frugally
Life in Malaysia is expensive, that’s a fact. Especially if you live in Kuala Lumpur. But it doesn’t mean you can’t do anything about it. Aside from setting aside money to save, look for ways you can cut back on spending.
Can you eat out less? Or carpool with co-workers to cut back on gas costs or cancel that TV subscription?
How about a new source of income, like taking on some freelance work? Heck, even selling some preloved items on Carousell might just work.
Step four: Open a new account
Keep your holiday money separate from all other savings you have, so you don’t ‘accidentally’ dip into it before the holidays come.
Open up a new savings account or a fixed deposit account earmarked for the holidays, so you’re not tempted to touch the amount you have saved. This method also helps you clearly track your progress.
If you have a fixed period to save for your vacation, it might make more sense to keep your savings in a fixed deposit account and take advantage of its higher interest rate.
Step five: Automate
This is where technology comes in handy. Set up automatic transfers from your usual savings or checking account to your holiday account at a set time every month (or every pay period).
Doing this prevents you from spending it on other things. You’ll also reduce your stress since it’s one less thing you’ll have to worry about or do yourself.
Step six: Reduce your travel costs
To make sure you stick to the budget you set for yourself, don’t forget to try to find new ways to reduce your overall travel costs when it’s time to start planning your trip.
Consider booking in advance or using travel comparison sites to locate the best deals for your destination. Take advantage of credit cards and rewards programmes you belong to earn perks such as frequent flyer miles or travel discounts.
Using a good travel credit card will also give you free travel insurance coverage, making your travel less stressful.
