Planning ahead is the key to successfully budgeting for a great getaway. Here are my top five tips to save for your dream vacation that will make saving – and spending – work to your advantage.
Have a Dedicated Account
The first step is to set up a dedicated savings account. By keeping it separate from your chequing account, you’ll be less tempted to spend your vacation money and you’ll always know exactly how much you’ve saved so far.
Make Automatic Payments
Once this account is up and running, set up regular automatic contributions to grow your savings. For simplicity, have the money transferred to this account on the same day that you get paid and you won’t even notice it leaving your chequing account. Think about this: Saving just $20 a week adds up to $1,040 over the course of a year!
Get a Travel Rewards Card
A great way to save is to get a travel rewards credit card. The biggest way you can save with a travel card is by using all the points that you build up while making everyday purchases toward your flights. However, many of these cards also offer discounts on car rentals and hotels and come with travel insurance, which can further reduce your vacation costs.
Minimize Exchange-Rate Fees
Buy foreign currency before you arrive at your destination. More likely than not, the exchange rate you’ll pay near tourist attractions will be higher because they know your options are limited.
Also, try to plan your spending ahead of time so that you won’t buy more foreign currency than you need. If you do, you’ll end up losing by paying exchange-rate fees twice – once to buy foreign currency and then again to sell it back. You can avoid overbuying foreign currency by using your credit card while away. But make sure to phone your credit card company before you leave because some credit cards charge higher rates than others.
Explore Tax-Free Options
If you like to shop, you’ll be happy to know that many countries offer a sales tax rebate for tourists. In European countries, where the sales tax – value-added tax (VAT) – can be as high as 20 percent, these rebates could save you a great deal.
In most cases, you’ll have to look for stores with “tax-free” displays in their windows or by the cashier to make sure that they participate in the program. When you make a purchase, ask the store employee for the rebate form. Fill out this form and bring it to the airport, along with the receipt and the item, before heading back to Canada so that customs can stamp it. Afterward, simply mail the package and collect your refund in a couple of weeks. You might even be able to get your refund at the airport, depending on where you are. While it may take a little extra work and time, it may be worth it if you’re trying to stretch every dollar.