Financially Speaking

Travel, fun, new experiences in new places, a few days in paradise. Is that your definition of the perfect vacation? Whatever your vacation dream might be, there’s one reality that will make it even better: you can help avoid the post-vacation remorse of mega-margarita debt by planning for the best vacation you can afford before you go. Here’s how.

Save now, go later. By saving for travel, accommodation and other vacation costs ahead of time, you can leave your credit cards alone and avoid big, long-term, high-interest bills at home.

Pay yourself first. A simple saving strategy and one of the best, whether you’re saving for a vacation, retirement, or anything else, for that matter. All it takes is the discipline to set aside a portion of your pay as soon as it comes in. A good rule of thumb is to choose an amount you can comfortably afford, either a fixed-dollar amount or a percentage of your income, for example 3 percent, that you set aside each pay period.

Get the most out of your savings. You could leave your savings in a low-interest bank account or, better yet, you could move your savings into investments that generate higher rates of return.

Money Market Mutual Funds offer competitive returns, can usually be redeemed in a matter of days.

Guaranteed Investment Certificates (GICs) or Term Deposits can be a good choice if your vacation is a long way off and you can commit your cash for a fixed term at a typically higher interest rate.

Government Savings Bonds are usually cashable at any time but only available within a limited period each year. If your employer offers an automatic purchase program for savings bonds, that’s a variation on the pay-yourself-first strategy that could work for you.

Tax-free Savings Accounts (TFSAs) are a savings option that delivers tax-free savings growth and immediate access to your money without a tax penalty.

When you save before your vacation, you may also save on your vacation, for example, taking advantage of last-minute travel bargains and purchasing travellers’ cheques before you leave so you can leave your high-interest credit cards in your pocket and avoid cost-added automated teller machines.

Your professional advisor knows all about the pay yourself first and other financial planning strategies that’ll get you to your own perfect vacation and other life goals without incurring high-interest bills when you get home.