How to plan your dream vacation

 Woman posing for a photo while parachuting

Is there a place you often find yourself thinking about getting away to or a trip you've always wanted to take? It could be more than a faraway thought or pleasant daydream. A well-executed plan and some budgeting could make it a reality. Here's how to get started.

Consider your overall goals

First, think about how high this ranks on your list of financial priorities. While you may have a unique strategy for reaching this goal, it still needs to work within your larger financial strategy. Your travel savings goal could impact the others. For example:

  • How much more would you need to find in your budget to still retire "on time"? Or would you be comfortable working a few more years?
  • Will it affect your spending at any point, ability to pay off a debt or plan to leave an inheritance?

You might not want to sacrifice your long-term goals for a short-term vacation, but maybe you're willing to make some trade-offs. Your financial advisor can walk you through some different scenarios to help you balance your goals based on what's most important to you.

Establish your vision

Visualize your dream getaway. What are you doing? Lying on a sunlit shore with a tiny umbrella in your drink? Having a drink at a local pub? Reaching the top of a mountain and taking in the breathtaking landscape? Are you traveling with anyone or on a solo adventure? How do you feel? Happy? Relaxed? Adventurous?

Then, think about what you want to get from your trip (i.e., adventure, family time, relaxation). Which aspects appeal to you most (i.e., the ocean, a theme park or other place close to your heart)? What would this trip have to have to fulfill your vision? Take note of these so you can prioritize them in your planning.

When planning a trip with someone else (i.e., a partner, friend or family member), remember to also consider their vision. You may have to compromise (similar to how you would if you were investing together).

If you're a more visual person and want to go the extra mile (vision-wise), you could create a paper vision board with corkboard or posterboard — or a digital one with design software or an image-sharing site like Pinterest. It can serve as an inspirational and hopeful reminder of what you're working toward.

Think through the details

Once you have a clear vision of what you want, you can begin mapping out (figuratively speaking, but possibly literally also) how to get there. Start by thinking about the specifics of your trip and considerations for being away from home. Then, follow up with research to explore your options.

Here are some things you might want to consider:

Calculate the cost and start saving

Estimate any costs associated with your answers in each of the categories above. Keep in mind the length of your trip and how many people will be joining you. If you plan to travel abroad and use local currency, you'll also want to factor in the foreign exchange rate. Rates fluctuate, but it'll give you a better sense of how far your dollars may go. Once you have your estimates, you can combine those numbers to get an idea of how much the trip will cost you in total.

Maybe you already have enough money saved up to cover the cost of your grand adventure, but if not, you have options. For short-term goals (within the next year or two), we recommend highly liquid, safe investments and, in most cases, cash. That cash can be held in a savings account, money market or short-term CD. It's fine to leave it mixed in with your everyday cash, but having it separated might make it a bit easier to keep track of how much you have saved toward this specific goal. For longer-term goals (three to five years or more), we recommend considering investments with growth potential instead of keeping the money in cash.

Ready to get started or need some help making an informed decision? Your financial advisor can help you estimate the amount you need as well as the appropriate savings vehicle to meet your target goal.