According to a recent study, 40 per cent of Canadians say they can’t afford a vacation and only 43 per cent said they take all their vacation days. One estimate by expedia.ca put the cost of unused vacations in Canada at $6 billion a year.
On the other hand, thousands of Canadians will go away this summer, racking up high spending bills that will put an even bigger dent in their already troubled finances.
So, should you skip vacation for the sake of your financial health?
Unless you are in major financial crisis, I would advise against forfeiting your hard-earned holiday, because you actually need the time off.
Instead, consider taking a paidcation, which the Association of Independent Consumer Credit Counseling Agencies suggests for individuals and families who want to keep their debt or spending in check.
What’s a paidcation? Simply put, it’s tailoring a vacation to funds that are currently available or can be saved in advance.
The first step is to establish a disciplined vacation budget that will not drive you into further debt or place undue stress on your finances.
Once you have determined how much you can afford to spend, based on funds in hand or that you will save before your holiday, carefully plan your activities and/or travel to fit this budget.
Your plan could range from picnicking at local parks and beaches to flying off to an exotic location for a week – it all depends on your available funds. What is critical is that you don’t want to finance your plan with a credit card or other borrowing. Here are seven suggestions to help you do this:
• Think local
Consider visiting attractions and destinations in the province rather than taking an overseas trip. This will not only help your pocket but also support British Columbia businesses and the local economy. Go to www.hellobc.com to explore local vacation ideas.
• Rediscover road trips and camps
In spite of higher gas costs, a family road trip will cost less than airline tickets and can provide excellent sightseeing and fun. Plan your trip well to ensure you can stop at popular attractions and map out affordable accommodations or camp sites on your route in advance.
On the subject of camps, did you know parents who send their kids to eligible summer camps lasting five consecutive days or more can claim the Children’s Fitness Credit? This is great way to get a financial return on your summer vacation spending.
• Consider rental homes
Hotels may offer the five-star treatment, but if you’re watching your money, look into rental properties for trips away from home. According to TripAdvisor, vacation rentals can result in hundreds of dollars less in spending than hotel costs. Families can save, for example, by renting property with a kitchen, allowing them to cook rather than spend money on restaurant bills.
• Time it right
Your costs can vary depending on the time of your vacation. Orbitz found that hotel rates are generally cheaper in June than July for top summer vacation destinations. If possible, move your vacation to a time that will provide the best savings, even it’s not in the official summer months.
Also, if you plan to travel abroad, watch exchange rates and buy foreign currency when the Canadian dollar increases in strength, to ensure you get the most bang for your buck.
• Pay cash
Credit cards provide a convenient way to pay for those occasional big-ticket needs, but if you suffer from VSSS, otherwise known as vacation spending spree syndrome (okay, I coined that one), I suggest you go old school – cash. Determine the maximum amount to spend daily, based on your budget, withdraw it in cash, and use it to pay for your expenses. Once the cash runs out, resist the urge to reach for your credit or debit card.
• Watch what and where you eat
Food can be a major expense during vacations. Limit restaurant visits to lunch to avoid the more expensive dinner menu. If possible, make and carry packed lunches with you when you hit the town.
• Keep daily tabs on your spending
Last, but not least, check you spending at the end of each day to see how you’re doing with your budget. If you have an idea how much you should be sending daily, you can quickly tell if you’re on track or need to rein in your spending.
Unlike the typical approach to vacation expenses, a paidcation is based on determining spending limits before your vacation plan, rather than organizing and taking the vacation and then trying to fit the aftermath into your financial picture. And the best thing about it – there are no bills to pay when it’s over. The only thing to worry about is saving for the next one.
Kathy McGarrigle is Chief Operating Officer for Coast Capital Savings, Canada’s largest credit union by membership size.