00:00 Speaker A
We’re in the doldrums of summer, but that doesn’t mean it’s too late to plan a last-minute trip to escape the heat. Joining us now with some tips on saving for and paying for your next big vacation is Yahoo Finance’s personal finance editor, Casey Bond. So, Casey, what are some tips would-be vacationers should keep in mind when they’re saving up for that dream trip?
00:28 Casey Bond
Well, the first thing to keep in mind is having that vacation budget in place. Do some research about how much your trip is going to cost you roughly, and then divide that number by the number of months you have to save. So that’ll give you an idea of how much to put away, um, every week or every month to reach your goal. Um, also, a good idea is keeping those funds in a high-yield savings account. Um, this allows you to earn a competitive interest rate, so while your money is sitting in the bank, you’re growing that balance as quickly as possible. And then finally, consider automating your contributions. This takes some of that mental pain away from physically transferring money out of your checking account every month, um, and it just ensures that you’re staying on track and consistent.
01:37 Speaker A
Okay, so that’s good advice. And what are some other smart strategies to keep in mind when you’re paying for that trip so that you’re not overstretching your spending limits?
01:50 Casey Bond
Well, several studies have found that about a quarter of people with rewards credit cards have points that are just sitting in their account going unused. So I would definitely recommend that if you do have a rewards card, you take a look and you see what rewards balance you have. And then see, um, what the rules are surrounding redeeming those rewards and how you can boost the value as much as possible. If you don’t already have a card or you’re considering getting a new one anyway, um, look for a card, a rewards card that has a signup bonus. So by spending a certain amount of money within a certain period of time, you can earn a signup bonus of rewards points that are often worth several hundred dollars, um, even as much as $1,000 that can go towards that trip. And then finally, um, an alternative financing option to consider is buy now, pay later. Um, a lot of these services allow you to break up the cost of, say, a flight, um, into smaller installments. So as long as you make those payments on time, you will incur very little to zero interest on that purchase.
03:29 Speaker A
And how far in advance should you realistically start saving for a vacation? And is there a particular rule of thumb on how much to set aside each month?
03:42 Casey Bond
Well, how much you’re going to set aside is really dependent on your overall budget, whether you have, um, you know, other expenses that you can cut back on, um, to allocate more funds toward that vacation. But, um, really, the sooner you can start saving the better, especially if you’re earning a good interest rate on, um, you know, in a high-yield savings account. That’s really just going to boost your balance, uh, the more time you let it sit there.
04:20 Speaker A
All right, Casey. Thanks so much. Appreciate your insights.
04:25 Casey Bond
Thank you.