My Second Home Down Payment Fund
My husband and I have toyed with the idea of buying a vacation home for years. Doing so would be a stretch for us, and we’d want to rent out that home on a partial basis to help pay for it. But just as I like to stick extra money into my vacation fund, so too am I in the habit of putting extra earnings into my second home down payment fund. That way, I’m not tempted to dip into that account to pay for vacations or other expenses.
Saving For Vacation In 3 Easy Steps
Remember being a kid in grade school or high school as the weather began to warm up, the days got longer, and you became antsier? The anticipation of summer vacation was near, and whether you had no plans or big plans, the freedom to spend time with friends, sleep in, and even travel without having to do homework, was great. Now just because you are a responsible adult, does not mean that feeling has to go away. Enter vacation time! So how do you go about saving for vacation? Simple planning goes a very long way.
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Now that you are working and earning a living for yourself, it is necessary to realize the importance of vacations. The US is a go, go, go society where sometimes working forty hours a week feels like a luxury, and we tend to think of vacations as self-indulgent instead of necessary.
However, much research has shown that vacations actually help us to de-stress, and become better family members, friends and employees. With that said vacations, as with any other personal investment need to be carefully planned for.
Create A Separate Savings Account
One of the best ways to prepare for vacation financially is to be pro-active. Even if you have not picked a location or time for your vacation, you should begin a savings account or a vacation fund. This money should be kept separate from other savings accounts or accounts used to pay bills out of. There are numerous banks and online banking organizations, in which you can open an account and make monthly transfers or transfer the any amount of money you would like from one account to your vacation fund.
Keeping this money separate helps to prevent spending this money on other items, as well as, it helps in planning for your vacation when the time comes. Once your account has been created, be diligent about contributing to it on a fairly regular schedule. When it comes time to plan your vacation you will be able to look at your account and determine how much you are able to spend, and where you are able to go based on the amount of money in your vacation fund.
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Experts’ Advice On Choosing The Best Bank Account
To learn more about what makes a good national bank and how to choose the best fit, four experts weighed in:
- Tania Brown, certified financial planner at SaverLife
- Roger Ma, certified financial planner with lifelaidout® and author of “Work Your Money, Not Your Life”
- Mykail James, MBA, certified financial education instructor, BoujieBudgets.com
- Laura Grace Tarpley, associate editor of banking, Personal Finance Insider
Here’s what they had to say about finding a bank.
Start Budgeting For Your Vacation
Its time to get down to business. The business of budgeting. This is the literal saving-for-your-vacation step. And its way easier if you set up a fund in your EveryDollar budgeting app.
Tactically speaking, this is how you do it:
- First, pick a budget category. We decided on Lifestyle.
- Then click Add Item and label your fundwe called ours D.C. Vacay. And we even added in a patriotic American flag emoji.
- Youll see a piggy bank pop up next to the words Make this a fund. Click this and the next button with the same words.
- Scroll down and put the total you need for this big expense as the Savings Goal. Thats the screen shot you see below.
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Make Your Credit Card Work For You
Consider using a credit card that accumulates airline miles for all of your regular expenditures throughout the year. Come vacation time, you could be flying for free.
Another option is to earn . Writer Steve Gillman scored hundreds of dollars in credit-card bonuses. Thats money to put toward your next road trip!
You can also earn tons of frequent flier miles without signing up for a credit card by shopping online, eating out, taking surveys and other methods.
Rollover Your Savings For The Next Year
Once you return from your dream vacation, its time to start preparing for your next adventure. Its never too early to begin planning, and you already have a surefire system in place. Dont be in a hurry to close your new savings account continue contributing to it instead. As saving money becomes second nature, youll discover other creative ways to set aside cash for trips or other big purchases.
Anyone can save for a vacation, no matter how much you make from your regular job. Think outside the box to come up with innovative ways to fund your savings. It can take time and practice to learn how to create a vacation savings account. If you need some wiggle room in your budget, a title pawn can help. Be sure to call or visit your nearest Title Tree store to learn whether you qualify.
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Cit Bank Savings Builder
CIT Bank is a unique savings account that is specifically designed to help people who are saving towards their goals.
It offers a reasonable rate of interest by default but offers a if you can meet its requirements.
To earn the increased rate, you must either:
- maintain a $25,000 balance
- make $100 deposits each month
The second option is the interest one — and it is the method that is most likely to encourage you to make progress towards your vacation goals.
As a bonus, there is no monthly fee.
Make Your Initial Deposit
Once you’ve opened your new account, you’ll be able to link a checking account and make your first deposit. Some banks require a minimum deposit amount. For consistent savings, you can set an automatic transfer into your vacation savings account to save a certain amount at regular intervals automatically.
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Which Types Of Savings Accounts Are Best
Another thing to consider when setting up multiple savings accounts is which ones to use as part of your savings plan.
For instance, you could open any of the following:
- Regular savings account at a traditional bank
- High-yield savings account at an online bank
- Christmas Club or other specialty savings account
- Regular money market savings account
- High-yield money market savings account
You can use all of these to fund your savings goals. Regarding which savings account option is best, it typically comes down to things like the fees the bank charges, the interest rate the bank pays and the minimum balance requirements. Getting the highest rate with the lowest fees may be the best combination for utilizing more than one savings account.
Also, keep in mind how youll access your savings to make withdrawals or deposits. If you mostly bank using mobile apps or online banking, an online bank can offer everything you need.
On the other hand, if you routinely need to deposit cash or prefer depositing money with a teller, you may want to have at least one savings account at a brick-and-mortar bank or credit union.
Finally, remember to review your savings accounts consistently to make sure they still fit your needs. If you find that the fees have crept up or the bank has slashed the interest rate theyre paying on savings, you may want to shop around for a new account elsewhere.
Set Up Automatic Transfers
Even if you know how much you need to save actually going through the process of saving that money can be difficult.
Remembering to keep some extra money in your checking account and remembering to transfer it to a savings account is hard.
Thats where automatic transfers come in.
Nearly every savings account lets you set up an automatic savings plan. You can tell the bank to pull money from your checking account every week, every month, or on whatever schedule youd like.
You dont have to think about saving at all.
Instead, the money just starts to pile up in your savings account.
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Wells Fargo Propel World American Express
Your Wells Fargo American Express Credit Card comes with great travel benefits such as emergency travel assistance, covering rental car collision damage, and more.
ATM and debit card customers: Joint accountholders or authorized signers on consumer or business deposit accounts have the ability to view, create, and edit travel plans on any card associated with that account. Travel plans set on a card affect all accounts linked to that card. However, joint accountholders or authorized signers can only view information associated with that account.
Sign-up may be required. Availability may be affected by your mobile carrierâs coverage area. Your mobile carrierâs message and data rates may apply.
Turning off your debit card is not a replacement for reporting your card lost or stolen. Contact us immediately if you believe that unauthorized transactions have been made. Turning your card off will not stop card transactions presented as recurring transactions transactions using other cards linked to your deposit account or the posting of refunds, reversals, or credit adjustments to your account. Any digital card numbers linked to the debit card will also be turned off. Availability may be affected by your mobile carriers coverage area. Your mobile carriers message and data rates may apply.
Certain terms, conditions and exclusions apply. Please review your Guide to Benefits for details.
Deposit products offered by Wells Fargo Bank, N.A. Member FDIC.
How Can Someone Determine Whether A Bank Is The Right Fit For Them
Mykail James, CFEI:
“The No. 1 thing about a checking account is you should know what provider the debit card is coming from. And a lot of people don’t think about that, because there are places that don’t accept MasterCard or don’t accept an Amex.”
Laura Grace Tarpley, Personal Finance Insider:
“I would look for the bank that charges you the least in fees. This means either no monthly fees, or you qualify to waive the monthly fees. If you never overdraw from your account, then a bank’s overdraft fees won’t matter much to you. But if you occasionally overdraw, then I’d look at the fees or overdraft protection options. If you travel frequently, search for an account without foreign transaction or out-of-network ATM fees.”
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Ways To Bank Extra Money For Your Trip
Strategizing how youll save money for your upcoming vacation is just half the battle. Making extra money or finding smart ways to free up some of your cash will get you there sooner.
Saving up for a big trip isnt easy, but these eight ideas should help you pad that vacation savings account and have your trip already paid for before you leave home.
Tips To Save For A Vacation
One of the most common reasons for not going on a trip is, Well, how on earth can I get enough money? Here are some ideas to help you save for your next great vacation:
1. Maintain a separate savings account or get a certificate. These funds would be just for travel money. Keeping your travel money in a separate account or certificate, will keep you from withdrawing it from your checking account too early.
2. Keep a change jar. This tip is an oldie but a goodie! We dont always realize how fast change adds up, but it can add quite a bit of funds to your vacation savings.
3. Have the kids contribute. If your children get an allowance, or do odd jobs to earn money, having them contribute the vacation savings is a good idea. Even just $5 a month adds up and helps to teach kids the value behind a vacation.
4. Cut back. Pick one or two indulgences and cut back on them or cut them out entirely for six months to a year. Taking the money that you would normally spend on an expensive latte, going to the movies, or eating at a restaurant, can quickly add up to big money in your vacation fund.
A good financial plan is always the prerequisite for a great travel experience. By making small steps towards saving for a vacation well before you plan to travel, youll set yourself up nicely with a solid travel fund that allows you to focus on vacation FUN and not financial worries.
CFCUs Celebration Certificate could be a great way for you to start your vacation fund.
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Advantages Of Keeping Separate Accounts
The main benefit of keeping the two accounts separate is to avoid the temptation of dipping into your savings for non-emergency items. Its a way to protect yourself from yourself.
Another key advantage is that having a designated savings account can make it easier to budget for major expenses during the year such as property tax or vacation. Setting aside money each month to grow the savings account is a good way to prepare so that when these events happen, youll have enough funds to cover the costs.
Trim Your Grocery Budget
Trimming your grocery budget doesnt necessarily mean compromising on quality, healthfulness, or freshness. You can still shop at your local food co-op, buy in-season produce, and avoid ecologically harmful or ethically questionable ingredients.
Everyones diet is different, so I cant get too specific with my advice here, but you can likely adapt most of these tips to your situation:
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Where To Keep Your Travel Fund
Were here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey.Read moreWe develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide.We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right.Read less
Are you a little obsessed with planning your next big trip? We hear you!
You are not alone. Youve probably seen the statistics that, as a society, were more into doing than buying: A University of Texas at Austin study found that experiences can enhance happiness more than acquiring additional possessions.
That wanderlust runs deep, especially after a couple of years of being cooped up due to the pandemic. The excitement of seeing new places whether that means a faraway tropical island or a neighboring state is a powerful lure. But theres one thing that may get in the way: Money.
Lets be real, travel can be expensive. Even if youre hopping in the car for a short weekend road trip, the cost of gas, food, entertainment, accommodations, and more can get a bit overwhelming. But, with a little bit of planning, you really can indulge in your travel dreams. And it can all begin by creating a travel fund.
Here’s Why I Have 3 Different Savings Accounts
by Maurie Backman | Updated July 17, 2021 – First published on March 20, 2021
Having multiple savings accounts helps me stay on track for different goals.
I’ve always been a saver — it’s something my parents instilled in me since I was a little kid. In fact, I’ve been socking money away in the bank ever since my teenage years, when my income was limited to babysitting and caring for neighbors’ pets.
These days, I work full time, so I have more opportunity to stash money in the bank. But rather than keep my savings in a single account, I have three separate savings accounts. Here’s how they break down.
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Keep Your Money Insured
One of the things that makes a savings account one of the best places to store extra cash is insurance from the Federal Deposit Insurance Corporation . The FDIC offers up to $250,000 in insurance, per depositor, per account type, at covered banks. If the amount of money youve deposited exceeds that amount, any money over and above the $250,000 limit could be at risk if your bank fails.
If youre fortunate enough to have more than $250,000 to put in your bank accounts, splitting your balance between savings accounts at different banks keeps your money safe.
For instance, if you have $300,000 in a savings account at one bank, $50,000 of your balance isnt protected. If you instead put $150,000 into savings accounts at two different banks, your full balance will be insured.
Your Vacation Savings Plan
You work hard for your money. You deserve at least one great vacation a year. But maybe you feel like you arent able to budget for much more than the occasional day trip.Think of your vacation fund as a necessity for your mental well-being. The fun and relaxation can boost your morale for monthseven having the vacation to look forward to can make your work days go faster. Here are a few simple tips to carve out a healthy vacation budget without pinching pennies.
1.Cut down on frivolous spending. Lets take packing a lunch as an example. If you buy your lunch daily, youll likely spend $10 a day. If you pack your lunch, you can easily get that figure down to under $5. Saving $5 each weekday doesnt sound like much, but at the end of 50 weeks, youll save $1,250.
2.Take advantage of your discounts. Whenever you rent a car, book a hotel room, or dine out, check to see what discounts are available to you . Saving 5% here, 10% there, adds up by the end of the year, and thats money you can put toward your vacation.
3.Start a vacation savings account. When it comes to spending, out of sight is out of mind. Open a separate savings account dedicated specifically to your vacation fund. Decide what you need to save for your vacation, divide that by the number of paychecks youll receive between now and then, and move that much into your vacation savings account each payday.
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