What do you talk about when you’re at a party? How big your home loan is or how great your holiday was? How many bedrooms your house has or how many steps you climbed to reach that temple in Central Asia? What stories will you be telling your grandkids: the ones about that time you extended your house or the experiences you had when you holidayed in that amazing location?
Holidays are a vital part of rejuvenation and recuperation and if you can combine your rest time with unforgettable experiences then you’re really ready to get back to work when you return.
Here are a few tips so that you can afford amazing experiences even with all the competing demands on your finances.
Four steps to a solid budget
Yes, a bit of therapy time. Acceptance, Awareness, Improvement & Performance are the four steps to creating and running a solid budget.
First things first, we need to Accept that the word budget is not actually a four-letter word. A budget is something that you create, you decide what needs to be spent where. It’s completely up to you. It’s safe to say that a good budget is the foundation to every financially successful person. So you need to Accept that having a good budget means you’ll have greater money management skills which of course leads to you mastering your money and leading your richest life
It can be illuminating maybe even surprising to you to find out just how much you spend in a particular area. Being shown what your financial reality looks like can sometimes be a little confronting. This is what we call Awareness of your expenses. If you don’t know where things are going wrong then how will you know what to change?
Improvement is where you take your new found understanding of where your expenses lie and use this to help you Improve your outcomes so that they better align with what you truly want. This is a constant process of renewal because you are never in your current stage of life for long.
The fourth stage in Budgeting is Performance so that you are hitting your targets month in and month out. Get in the zone and really make your budget work for you.
Now, there are so many different types of budgets going around so, rather than be intimidated or assign an air of resignation you need to try a few out and adopt the one that works best for you. Remember that it doesn’t really matter how your budget works, as long as it does work.
Get your Vision of your holiday right
If you’re dreaming of an ideal holiday but you have no idea what that looks like then you’re unlikely to ever actually have that experience.
Ask yourself as many questions as possible so that you can refine what it is you’re after down to something as exact as you can.
- How many people are going with you? Is it a solo trip, with a friend or partner, with kids, with relatives, with a group?
- Is your destination just the one place or a group of places to be visited one after the other?
- What sort of weather are you looking for? Sun, sand, snow, wind, water, fog, heat?
- Are you looking to experience another culture and language or is it more just a location that you want?
- Does the travel itself constitute part of the experience?
- Is it an active holiday with lot’s of adventures and hikes or is it a passive holiday with lying by the pool the main agenda?
As you design your holiday and your vision starts to get clearer try and get a mental picture of what your experiences will feel like, what will the sights and sounds and smells be?
You’re not just building a holiday, you’re building an experience. It might not be a life-changing experience but if you’re clear about where you’re going then it’s going to be a memorable one.
Cost it out
I’d love to say that you don’t have to think about money but it’s a reality for all of us and if it wasn’t then I also probably wouldn’t be writing this post.
So, it’s time to start costing out your holiday.
Personally, I find the easiest way to do this is using a spreadsheet. I’ve tried different sites online to plan out the trip and its finances but I always end up back at the simple and dependable spreadsheet.
If I put in flights, car hire, fuel, insurance, hotels, day trips and food allowances I can then try and break down the trip to a daily cost per traveller. When added up over the total number of days I’m planning to be away the final figure can get a little confronting. It’s important to be aware of these figures though otherwise you’ll wind up with the most dangerous financial illness of all and one that can be crippling to your future: The Holiday Hangover.
It has nothing to do with the amount of beverages you’ve enjoyed but rather a lot more to do with the credit cards and personal loans you’ll take out to try and pay for everything you’ve committed to at the last minute. Believe it or not, I’ve met many people who have taken this short term finance in the middle of their holiday after they’ve quickly worked out that they’ve run out of money prematurely. It’s not a great place to be nor a recommended experience.
Automate and hide
If you’ve followed the steps above then you’ve worked out some of the ‘know’ part of your holiday finances but now you need to ‘change’ some of your money habits so that you can ‘do’ the saving required to get you going.
I find the most successful way of doing this is via the ‘automate and hide’ method.
It’s a straightforward process of taking the total cost of the holiday you’ve worked out and dividing that by the number of weeks until you want to leave. The weekly savings figure you’ve calculated can then be added to a savings vehicle on an automated basis so that it’s deducted straight from your pay or from your pay account as soon as possible after your pay is credited.
Add the money to an account that you are unlikely to be tempted to touch such as an account that is not on your internet banking account, maybe an account at a different bank to your regular bank or maybe even extra repayments on your home loan as long as you’ve checked first that you’re able to draw that money back when you need it.
This is so it is removed from sight and your day-to-day decision-making process and you are less likely to raid the funds to pay for some other urgent but not important emergency. **unless it is actually a real emergency in which case remember the holiday takes a back seat in priority!!**
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Take comfort that your holiday will happen
Remember the steps:
- Organise your Budget
- Nail your Vision
- Cost out the holiday
- Automate and Hide your savings
There will always be detours to the financial planning of your holidays but if you follow the steps you can take comfort that your holiday will not just be a dream, it will be a reality experience that you’ll be talking about for the rest of your life.