It's SmartMoney Monday, and we're starting a new topic for August—savings. Today, Keane Santos, Assistant Main Banking Center Manager, from Bank of Hawaii, is here to provide some ideas on saving for a trip.
It can be hard to stick to a budget, let alone finding the extra income to save for a trip. How does someone get started?
It's all about planning. The best way to get started is to set a specific goal for destination and dollars.
You might decide that you need $3,000 for your dream vacation in six months. Then you should determine how much you need to save in order to reach that goal before your trip.
Saving $500 per month might be overwhelming for some people. How does someone go about it?
Don't think of saving $500 all at once. When you break it down into smaller increments, the day-to-day actions you need to take to achieve your goal becomes easier. Think about saving $125 in one week. One place to start is to inventory the items you purchase. Then, decide what is necessary. Food is; purchasing your favorite coffee drink on a daily basis is not. If you brought your own coffee from home every day, that could total $100 in savings per month.
We've all bought something we probably didn't really need. How does someone resist that?
We're all tempted to buy things we sometimes don't need, but over time even the little things add up. When you're saving for a specific goal, like a trip, think about the experience you'll have in the end. If you're serious about meeting your goal, you'll stick to your budget. Remember, scaling back for several months is only temporary.
That's good advice. What are some other things can people do?
Go back to the items or purchases that aren't absolutely necessary. For example, if you have an unused gym membership, you may think about canceling it until you reach your goal. You can always watch an exercise video online, go for a run or hike. There are many economic ways to get in a good workout. The same goes for the salon and even dry cleaning. Skip the hair, nails or massage appointments for a few months. And try one of those at-home dry-cleaning kits for the time being. Remember, ask the question: do I really need this?
Along those lines, packing a lunch would help too.
A recent study reported that half of employees buy their lunch and spend $25 or more a week. So consider bringing lunch. You may also consider things like cutting back on cable and premium channels. If you have a tablet or smartphone, you can watch many of your favorite shows online without feeling left out! Remember, this is about scaling back for a set period of time
Any last-minute tips?
Set yourself up for success. If you think you might be tempted to spend your savings, consider setting up an automatic transfer. You can even set up a separate savings account. And when it comes time to take that trip, remember that there are some cheaper accommodations available. And don't forget about a travel reward credit card so you can benefit from the points.