Why to Open A Vacation Savings Account
Between transportation, lodging, food, and activities, vacation costs can add up quickly. Vacations are meant to be fun, but penny-pinching and worrying about finances can put a damper on the whole trip.
Using a credit card may be an option for some families but taking on debt may ultimately add to your worries and prevent you from relaxing. Saving up beforehand is another option for financing your vacation.
You can set aside the cost of the trip months in advance in a special, dedicated vacation savings account to help eliminate a bit of the planning stress. It’s relatively quick and easy to open a new account and to start saving for the next destination on your bucket list.
- A vacation savings account allows you to save for a vacation separately from your emergency fund or other savings goals.
- The psychological benefit of having a dedicated vacation fund is that it can help you stay motivated to reach your savings goal.
- Choosing a high-yield savings account allows you to earn more interest on your balance.
A vacation savings account is an account where you deposit money that you’ve earmarked for a future vacation. The added benefit of using a separate account for your vacation funds is that your savings have the opportunity to earn interest, depending on your balance and the interest rate.
Saving for bigger purchases takes time, patience, and dedication, but a designated vacation savings account benefits you beyond simply helping you save for your time away. It allows you to maximize the benefits of a getaway.
Lumping all your savings into one account can make it hard to determine how much you’ve saved for vacation versus emergencies and other goals.
Small wins like adding $100 to your balance or reaching the halfway point can help you stay motivated to continue building your savings.
Vague savings goals can be uninspiring because they lack the anticipation that a specific goal can bring. A vacation savings account has a clear goal from the start that can provide constant motivation to stay dedicated. Assigning a goal that’s separate from your everyday spending means you don’t
Maintain a Safety Net
You’ll be less likely to skim from your emergency fund to pay for your vacation if you keep a separate vacation savings account as part of a well-planned budget. An emergency savings account is an important part of a healthy budget because it allows you to handle unexpected expenses without going into debt. Not having one can make it difficult to recover from emergency costs like medical or car repair bills.
You can avoid building a habit of dipping into your emergency savings for non-emergency expenses when you have a separate account for your short-term savings goals. You can instead develop the mentality that taking money from an emergency fund to pay for non-emergency expenses is off limits.
Rather than putting your vacation on a credit card and paying interest, you’ll have the advantage of funding your vacation in full. Better yet, you can put your vacation on your favorite travel rewards credit card to earn rewards and enjoy travel perks. Just be sure to use the money in your vacation savings to pay off the balance right away.
Using the money in your savings account to pay the balance on your travel rewards credit card as immediately as possible will let you avoid paying interest or creating new debt.
You can open a savings account with your existing bank or take advantage of a high-yield savings account from another bank or credit union.
Check the fees, services, and interest rate on the account you’re considering whether you’re opening it with a new bank or your current one. Some savings accounts require that you place a minimum deposit, or they may require that you maintain a minimum balance to avoid paying a monthly fee. Some savings accounts have features like goal settings or the ability to name your account. This can add more enthusiasm and motivation to saving.
Open a Holiday and Vacation Savings account today at Cincinnati Credit Union – Presidents Federal Credit Union (FCU) is federally insured and backed by the full faith and credit of the United States government for all accounts up to $250,000.00. We have over 60 years experience and offer the best values with friendly customer service.