Monday, January 28, 2013

Budget 101: Funding Your Dream Trip

I've never been backpacking and I've yet to stay overnight in a hostel. As deep rooted as my love for travel is, I continue to let cost remain my greatest hindrance. This may be due, in part, to ensuring a relaxation component on any trip I take; I've always veered from the on-foot, room-sharing versions of adventure. Needless to say, this petty habit has kept me from exploring a great many destinations on my bucket list. Currently, Greece, Norway and Peru are all filed under the "Someday..." category. But they don't have to be. 

With a well thought out financial plan, travel of any sort (backpacking or snoozing in a St. Regis) is perfectly do-able. Problem is, it takes a bit of forethought. And no shortage of self control.

There are, however, some very basic steps that can help to get the ball rolling.

Saving for Short-Term Travel
Not all of us have the time to wait for those fixed rate bonds to mature. For trips less than 12 months away, open an online savings account  (or a short-term certificate of deposit, or CD) and automate your paycheck to funnel a set amount of dough into the account every month. Nickname the account "Aloha Hawaii" or "Corona on the Beach;" anything that will inspire you to continue socking away some cash.

Create a formal budget for your household if you haven't  yet, and then search for leaks that could save you money over time. Rather than dining out twice a week, why not dine out only once, and stash the $50 that you would have spend in a vacation vault? Scour your monthly expenditures and cancel any of the subscriptions that you rarely use; even three monthly subscriptions (to a trade journal you never read, the movie channels you forget you have and an online membership) can negate $30 or more a month, which adds up to $360 a year. (An extra night at the hotel, plus massage! Maybe?)

Saving for Long-Term Travel
The farther away a trip, the more grandiose it should be, in my humble opinion. If you can, skimp and save on life's greatest expenses (house and vehicles) to ensure that your budget will continue allow for fun money. Once you've built up a series of Jonses expenses, it's hard to live without them, so adjust your mentality accordingly. Sacrifice small everyday conveniences for the sake of life-defining moments afar. If you have children, make getaway planning a family activity (even when saving years in advance). The best things in life are worth waiting for, right? And the only way to learn that lesson is to live it.

Or, maybe you're dreaming of spending your retirement abroad. You've got a bit of time to let your investments work for you. Consider utilizing a portfolio of CDs or bonds that will accumulate interest over time (financial institutions like LloydsTSB International make signing up easy from anywhere). Stagger the maturation of each so that each year, you can count on withdrawing a certain amount of money to dedicate to travel.

Whether you're plotting an international excursion next month or five years down the road, plenty of free resources exist to help you budget or maintain savings momentum. One of my favorite money blogs, Get Rich Slowly offers up a whole slew of travel-related posts, chock full of usable tips. Travel site Lonely Planet also sheds light on adequately prepping financially for "The Big Trip."

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