Are you planning your next big vacation? There are a few important things that I go through with my clients when we think about saving for a vacation. To help us, I have three different groups that we can use as examples to run through some strategies. One for a couple, one for a family of four, and one for a solo trip.
First I want to talk about a “Sinking Fund”. A Sinking Fund is a stash of money that you put away over time for a specific short-term purpose. This will make even more sense when we get into some of my examples. But overall, the idea is to avoid scrambling at the last minute for money or to pull from savings for other goals or even going into debt.
Example #1 Couple
For our first example, let’s say the couple is looking to travel in May. In this example, I have the couple flying to Arizona, staying at a boutique hotel. The overall cost of the trip is budgeted for a total of $5550. If we divide $5550 by 2 people (assuming they don’t manage their finance together), that’s $2775 each. They each will have to save $693.75 per month and therefore $346.8 per paycheque into their travel sinking fund per month.
A few things to point out for couples:
- May is a great month to go in because it’s off-season and therefore cheaper.
- Flexibility in terms of flight times is important, be open.
- And to help them manage what they’ve spent and potentially owe the other person, they can use an app like Split Wise.
Example #2 Family of Four
For example two, I have this family travelling to Florida to an Airbnb in August. They will need to buy the vacation in advance as they aren’t as flexible on when they can go so they don’t want to take the risk of booking so close to the vacation.
Something exciting here is that they can use Travel Points. The more you spend on travel (such as having to book for so many people), the more points you can collect and if you know this is an annual or more than once a year occasion, you might decide to find a credit card that can let you take full advantage. They have also decided to have a kitchen to make some meals at home. They need to set aside $830 per month and if they do this for 5 months at a stretch they can move to save for something else after!
Example #3: Solo Travel
This last example will resonate with lots of folks with the work from home that has been happening all year. As a solo traveller, you have lots of flexibility with less coordination to do with different people. In this example, I have the solo traveller finding deals and booking last minute. I checked in with the co-founder of, Good Weekend Co, a company that features curated getaways 3 hours outside of a city centre (I used their @goodweekendtoronto and found an awesome deal up North). They showcase really cool getaways and can sometimes show really awesome deals. And she gave us a few tips for this solo traveller to find the best deals for their budget.
- Using social to your advantage – turn on notifications. Use Insta Pages like Good Weekend Co. for local Travel or Social Pages aline for International Travel.
- Save up for it but be okay acting on a whim. Last minute deals for hotels & flights can become available that can work to your advantage
- Not being married to specific weeks or weekends because booking on a weekend like Valentine’s Day or a Month like December will be more expensive.
In this case, rather than working backwards from the cost of the trip and creating a finite amount to put away, this individual can decide to continually save $300 a month and can book a last-minute trip according to how much they have in the sinking fund at that given time. This provides lots of flexibility.
An important point is about living within our means and seeing the Sinking Fund as part of the bigger picture. In the case that your goal per month is unattainable, for example, you cannot save the amount of money that you’d like to before you go on vacation. Consider pushing your trip out further or cutting costs somewhere else that you are currently spending money on.
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