Going on regular vacations is essential for your mental health. A relaxing break in your day-to-day routine soothes the soul and reduces stress. However, if you pay for that vacation with credit, especially at a cost you can’t comfortably pay off in 1 or 2 months, then the vacation could cause even more stress.
Here’s a great idea one credit union member, Steve N., and his family uses to pay for a vacation. It enables them to save up money before the trip and save them from financial stress after the trip. He writes:
“Every year we start saving for our next vacation as soon as we return from one. Each month we transfer a fixed amount out of our checking account into a credit union money market ‘vacation account’ that receives a higher rate of interest. My wife and I agree to use this account only for vacation savings.”
Steve emphasizes getting agreement from the family. For any successful family budget goal, you must have buy-in. He continues:
“In addition to our monthly transfer, we have an agreement to deposit every gift of money we receive—from Christmas, birthdays, whatever—into this account. The same goes for any rebate checks we receive from product purchases during the year. Basically, every little ‘extra’ check we receive goes directly into this account.”
Every so often, Steve and his wife pull money out of their money market account and put it into a short-term share certificate/CD (certificate of deposit) to get an even higher yield. He says they have CDs maturing almost every month that they can then deposit into their money market vacation account.
Steve and his family are doing several smart things that you can apply to any savings project:
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They have a goal—to vacation without borrowing money.
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The goal has a deadline—the date of the next vacation.
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They automate their savings—it’s easier to save when it’s done automatically and not randomly.
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They agree on the strategy and work together.
If you’re interested in learning about kstate CREDIT UNION products that can help you reach your savings goals, like a Money Market account or a Share Certificate of Deposit, text or call us at 785-776-3003.