It's the beginning of the new year and you already have your calendars out, planning for the many holidays during the year. Whether it is a long weekend away or your child's summer vacation, it is imperative that you plan your getaway in advance. Planning your holiday in advance will ensure that you have an enjoyable vacation that is not invaded by unnecessary hiccups. In addition to planning where to go or how to go, you must also plan how you are going to finance the vacation. A few simple steps to follow to enjoy a worry free vacation.
First and foremost is to decide the location. Do you want to go to a beach destination or do you want to get lost in the mountains? Do you want to explore your own country or do you want to wander on the streets of a foreign destination? The choices are infinite. Additionally, your choice of destination will have a large impact on the amount of money you require and the kind of preparation you need to do for the holiday.
Once you have decided the location the next thing you need to do is determine the cost of the vacation. Include travel expenses, accommodation expenses and miscellaneous expenses that you might incur on your trip. You also need to decide when you would like to take the vacation. Is it in the next six months or is it for the next year? The time horizon is integral to ensuring that you have enough money for your vacation. Now, comes the most important part. How are you going to finance the vacation? Maybe you have just received a big bonus and are planning to spend it on the vacation. However, if that is not the case then you need to save and invest for your dream vacation.
If you are planning on taking your vacation in the next six months, then the best option that you might have is to invest in a liquid fund. These are simply debt mutual funds that invest your money in very short-term market instruments such as treasury bills, government securities and call money that carry a minimal amount of risk and are liquid in nature. Incase you are planning your vacation one year hence, then in addition to liquid funds, you can consider investing some money in a 1-year fixed deposit.
Holidays should ideally be a stress-free and enjoyable experience. Therefore, it requires judicious planning.