Vacations provide a welcome respite
from the daily grind of work and life's routines. However, all good things come
with a price, and that cost can sometimes exceed expectations.
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According to Bola Sokunbi, the
founder of Clever Girl Finance, overspending on vacation is a common issue. The
allure of various indulgences can lead us to a different mindset, where we feel
inclined to treat ourselves excessively.
Additionally, many adopt the "work hard, play hard" mentality,
believing that after putting in long hours to earn money, it's time to splurge
on whatever we desire.
If you find that you've exceeded your budget on your last vacation, there's no need to panic. We've consulted experts for their advice on how to get back on track financially after a particularly indulgent trip.
Assess the damage
"When you return from vacation, the first step is to accurately track
your expenses," advised Courtney Alev, a consumer financial advocate
at Credit Karma. "Review your credit
card statements and bank accounts to identify all transactions, and recall any
cash expenditures."
It's important to also consider any
outstanding obligations, such as reimbursing a friend who covered restaurant
bills or settling your hotel charges.
"Even if it's daunting, it's crucial to face your post-vacation finances
directly," Sokunbi emphasized. "You might discover that you've spent more or less than anticipated."
Make a note of your upcoming credit card payment due date and assess if you'll have the necessary funds available to cover it, enabling you to take prompt action. Avoid the temptation to ignore the situation.
Create a realistic plan
"Setting financial goals is a fantastic strategy for recovering from
overspending," Sokunbi suggested. "Once you've determined the extent of your overspending, you can set
that amount as your savings target. For example, if you overspent by $1,000,
aim to save that amount over the next two months."
Consider participating in a
specific money-saving challenge to add a fun element and make saving more
engaging. Share your goals with friends and family or join an online community
for additional support and motivation.
"Savings challenges involve saving a fixed amount of money each week for a set period," Sokunbi explained. "It's a great way to maintain motivation while saving money."
If your overspending has led to
credit card debt, prioritize repaying that debt as quickly as possible.
"Create a debt repayment plan by determining how much you can allocate
toward your credit card balances to expedite payment of these travel expenses
before high-interest fees accumulate," advised Andrea Woroch, a
consumer finance and budgeting expert.
"Considering the average credit card interest rate exceeds 24%,
incurring any interest on travel expenses means you'll end up paying 24% more
for them!"
She suggested obtaining a balance
transfer credit card to give yourself a grace period for repaying your debt
without accumulating interest. It's important to be realistic as you devise
your plan.
"Set realistic financial goals and timelines," recommended Kara Stevens, author of 'Heal Your Relationship With Money' and founder of The Frugal Feminista. "Breaking down larger goals into smaller, manageable steps can make the process more achievable."
Embrace a ‘little spend’ lifestyle, at least temporarily
Alev suggested making temporary
adjustments to your budget to accommodate recent bill increases and reduce nonessential
spending. She also recommended embracing a "little spend" lifestyle,
focusing primarily on essentials until you're in a better financial position.
After indulging on vacation,
tighten your budget to repay debt or replenish depleted savings. Avoid making
purchases beyond necessities for a week, a month, or however long necessary.
Sokunbi advised saving money by preparing meals at home instead of dining out and hosting movie and game nights at home instead of spending on entertainment. She also suggested waiting 24 hours before making a purchase and disconnecting your cards from online stores.
Woroch suggested eliminating luxury
services you can do without, such as monthly massages, bimonthly manicures,
monthly house cleaning, or weekly car washes, and saving the money you would've
spent to help pay off your travel expenses. Budgeting tools and apps can help
track expenses and increase awareness of your spending habits.
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Sokunbi recommended the cash envelope method as a helpful budgeting strategy. With this approach, you allocate different amounts of cash to various expenses in your budget. Once the money is spent, you have reached your spending limit, which can make you more aware of your spending.
Be a savvy shopper
When shopping for essential items,
adopt a smarter approach to save money.
"Use cash-back sites when purchasing daily essentials, as the money you
earn can help pay off your travel debt," Woroch advised. "Save on groceries by meal planning and
comparison shopping."
Switch from brand-name to generic options for pet care supplies or home goods whenever possible. Additionally, make use of credit card points to save money.
Stay consistent
"It's important to maintain consistency," Alev emphasized.
"If your repayment plan and new
budget feel unrealistic once you put them into practice, and you find yourself
falling behind, adjust them so that the goals you set are achievable."
If you fall behind, don't be
discouraged. Take an honest look at your needs and routines, and make necessary
adjustments to your plans.
"You know your spending habits best, and you can avoid putting too much pressure on yourself by taking it step by step," Alev added.
Shift your mindset
"The thought of settling your vacation bills might seem daunting.
However, delaying payment could lead to more financial strain, particularly if
interest charges start accumulating on your credit card bill," Alev
suggested. "Consider shifting your
perspective: Think of your temporary spending adjustments as a choice to lessen
your financial burden, rather than something you're forced to do. This mindset
can help reduce some of the stress."
Changing your mindset not only
enhances your mental well-being but also encourages you to adopt habits that
can help you get back on track.
"Don't blame yourself for overspending during your vacation," Sokunbi advised. "Remember, we only live once. Instead of dwelling on your mistakes, take proactive steps with your finances. Stay mindful, focus on your objectives, and prioritize saving. The more you concentrate on improvement, the easier managing your finances will become."
Consider a side hustle
“Another approach to consider is increasing your income,” Sokunbi
suggested. “This could involve working
more hours at your current job, taking on a part-time job, or starting a side
hustle.”
Discuss ideas with friends and
think creatively about ways to earn extra money. For example, you could sell
unwanted clothes and items on platforms like Poshmark or Facebook Marketplace.
“Explore side hustles that you can do in your spare time to boost your income,” Woroch advised. “These don’t have to be permanent commitments; you can return to them when you need extra cash, such as when planning a major trip. I recommend flexible side hustles that don’t require specialized skills, such as pet-sitting.”
Learn from the experience
“Reflect on your overspending and pinpoint the specific reasons behind
it,” Stevens advised, recommending that you “draw lessons from the experience.”
“Apply these insights to adjust your financial habits and make more
informed decisions moving forward.”
Beyond ensuring your future
vacations are financially smoother, you can also apply these lessons to your
overall financial management.
“Use this experience as a catalyst to begin or replenish an emergency
fund,” Stevens suggested. “Having
savings can serve as a financial buffer for unforeseen expenses and help
prevent future overspending.”
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