Can we be honest for a moment? Travel is expensive. Even more so when you include your kids. While I am absolutely a fan of traveling with your children, funding family vacations can sometimes be so daunting that it makes it feel impossible. Amiright?
So, in the spirit of Internet sharing, I figured I would detail how we pay for our trips. We don’t travel frequently enough nor do we have enough expenses to utilize miles or credit card point sorcery. As a result, almost all of our expenses are financed with cash.
Please keep in mind there is no “one size fits all” answer to the question of how to work this out for you but hopefully it helps a little.
In a previous post, we laid out how we categorize our trip expenses. There are essentially four categories of expenses: basics, necessary expenditures, trip luxuries, and cushion.
[Related: Budgeting for Family Vacations]
To cover these items, we source the income a few different ways.
Catch-All Savings Account
Throughout the year, we automatically deduct a percentage of every paycheck and ship it off to a savings account. Any percentage will do! We allocate 10%. It is a general, catch-all, emergency fund type account that we use for various life surprises but it is also where we stash money for travel basics.
Both airfare and lodging come from this account. Airfare is taken out of the account immediately after purchasing tickets. However, for hotels, we typically select a hotel that does not require payment until check in — even if the rate is slightly higher. This gives us time to accumulate funds to pay the balance. Plus, because we book so far in advance, the money is better purposed in our account generating interest than with a hotel holding our spot.
If we happen to book an AirBnB or find a hotel that is ridiculously inexpensive if we pay upfront, we pull it out of the savings account immediately.
Depending on your travel goals, it might take some time to accumulate enough to cover your basics. That’s okay! We did this process for years before we felt comfortable extending the catch all account to include travel. Work at your own pace and follow the process!
Dependent Care FSA
Before I explain this one, let me just say up front there is absolutely no funny business going on here. None.
Now that that’s out of the way, a Dependent Care FSA is a Federal Savings Account used to pay for eligible childcare services. The primary benefit of any FSA is the money contributed to them are not subject to payroll taxes. The end result? More money coming to you from your check every payday.
Usually you file for reimbursement for your childcare expenses as soon as they are due. Instead, we pay out of pocket and leave the funds to accumulate in the FSA. There’s no rhyme or reason to this except it is a surefire way to make sure we don’t touch the money. We file for reimbursement about a month before the trip and use it for the majority of our necessary expenditures.
If you rely on those funds to cover the cost of child care, try reserving just a portion for travel — anything helps!
Just for the sake of clarity I’ll repeat: we incur eligible child care expenses and follow all the legal guidelines around having a dependent care FSA. The only thing we do a little differently is delay filing for reimbursement until right before our trip.
Cash on Hand
This refers to the money we have left over from our paychecks after our regular bills are paid. Maintaining some regularity in this area is a constant work in progress for us. Momma loves making it rain at Target which can put a serious dent in our cash on hand. However, we try our best to keep a tight control in this area once we have a trip in the works.
Skipping dinner out, shutting my eyes when I pass Target, watching Netflix instead of going to the theater — all necessary and willing sacrifices to make a trip happen.
Let’s overview, shall we?
- Transportation – Catch All Savings Account
- Lodging – Catch All Savings Account
- Feeding the Crew – Dependent Care FSA
- Getting to/from the Airport – Cash on Hand
- Getting Around Town – Dependent Care FSA
- Cell Phone Plan – Cash on Hand
- Required luxuries – Cash on Hand
- Desired luxuries – Varies between Cash on Hand and Dependent Care FSA
Pretty simple system, right? And it works!
[Want even more detailed financial information from our trips? Check out our Trip Toll Reports!]
What about you? Do you have any special saving techniques to fund your family trips? Please leave a comment below!