Concrete advice for organizing your vacation without putting your money at risk

Taking time off is essential to be able to perform well the rest of the year. But not at any cost.

If taking a break allows you to recharge your batteries, it shouldn't be at the expense of our finances or creating debt. In fact, that fun week of vacation can turn into a burden that you'll be carrying for months if you use your credit card to make ends meet and then don't pay off the balance in full. Since interest rates are usually around 20%, we will pay twice for these few days of rest…

How to escape the debt trap? Carl Vignola, private banker, TD Wealth Management, has some concrete tips to better organize your money in preparation for those well-deserved annual vacations.

budget

In order to budget well, you have to plan well first. “Often, the difficulty is that we have miscalculated the expenses related to the trip. As a result, a bunch of unexpected costs are added to the bill,” points out Carl Vignola.

This is why a rigorous pre-planning exercise is recommended.

A good starting point is to figure out what you would spend if you stayed home, on groceries, going out, eating out, transportation, etc., say $1,000 a week for your family. You likely already have money in the bank that you will need to live in the house for a week or two. In this case, you can simply allocate this budget to your vacation. In addition, if your vacation is planned for August, you still have a few weeks to accumulate the rest of the necessary amount.

Don't forget to plan for small extras that will likely increase the bill on site (activities, miscellaneous purchases, etc.).

To make your task easier, feel free to use budgeting applications offered by most banking institutions.

Take advantage of your points

Another good tip: Use the points accumulated with your credit cards. “Many of them offer discounts on travel, for example. Now is a good time to take inventory of the points you've collected and decide how to best use them,” says Carl Vignola.

You can use it to buy or pay for a plane ticket, spend one or more nights in a hotel, access promotions with travel partners, etc. Don't let your points sleep!

“Some cards also give a large number of points as a sign-up bonus, which can equate to a tidy sum. But be careful, this strategy is only valid if you pay off the balance in full each month so you don't have to pay interest charges,” advises Carl Vignola.

Many of them also offer travel or rental vehicle insurance, which reduces expenses.

Other ways to save

To make your vacation less expensive, evaluate different scenarios. For example, is it absolutely necessary to travel abroad? A trip to Quebec can be quite satisfying. Remember: The memories we have are generally related to the people and times we live, not necessarily the places.

Also evaluate your departure time carefully, as some periods are more expensive than others, 'construction holidays' being particularly popular, and school holidays in general. If you have to travel by plane, know that flights that include a stopover are generally less expensive than direct flights.

To reduce costs, renting accommodation instead of a hotel room is also a good option, because you can then prepare meals at home instead of eating them in a restaurant. Better yet, split the expenses, or rent a larger residence or chalet for several families.

Final tip: Make AI work for you. Thanks to free tools like ChatGPT for example, you can ask questions like “Where can I go on vacation with a budget of $4,000 for a family of four?”, or “What is the cheapest destination in Europe this summer?”, etc. “This allows us to do an initial screening and collect valuable information. We can then refine the search and identify the best things to do there, places to eat cheaply, etc.,” concludes Carl Vignola.

advice:

· To avoid getting into debt, it is best to set aside money in advance for your vacation in a separate bank account. We start by estimating the required amount, then divide it by the number of months remaining before departure, and save the required amount each month. And at the end of the process, you'll have the money you need without having to use your credit cards!

· Automatic monthly transfers to a separate account are a great way to save systematically without thinking about it. This method applies to a vacation budget, but also to any other project (renovation, down payment on a house, etc.).