**This is a sponsored post written by me on behalf of Alterna Bank. All opinions are my own.

Planning vacations are one of the best things to do. Honestly, there’s nothing quite like looking up all the awesome things you can see, do, and eat while you’re travelling. The problem is, when you’re doing all that research, you don’t want to miss out on anything, so you start packing your itinerary with things to do.

Not only does this create chaos for your schedule, but you could end up overspending as a result. This might not be an issue if you’ve got some extra funds available, but the last thing you want to do is start charging stuff to your credit card because you have a fear of missing out.

To help you keep everything under control, I’m sharing 5 tips on how to plan a vacation without going into debt.

How to Plan a Vacation Without Going Into Debt

Start researching costs now

It doesn’t matter where you’re thinking about going, you need to research all your costs in advance. I’m talking about flights, hotels, local transportation, food & drink, attractions, and random spending. That may seem like an extreme thing to do while you’re in the planning stage, but if you don’t know how much things are going to cost you, how are you going to budget accordingly?

I typically research a few different destinations I’m interested in, and sometimes I’ll quickly realize one destination is cheaper than the other. For example, Bali and Jordan are less expensive destinations compared to Iceland even though you can find flights to Iceland from Toronto on sale for $400. When you factor in all the expenses associated with your trip, you’ll have a clear picture of how much your vacation is going to cost you.

Don’t buy flights on impulse

I love a good flight deal. Honestly, nothing excites me more than seeing a ridiculously low price advertised, but I’ll never instantly book a flight even if it’s 50% cheaper than the average price. As explained above, you really need to factor in the additional costs associated with your trip.

What good is a $400 flight to Hawaii if it’s going to cost you another $3,500 once you’re on the ground? It’s easy to convince yourself that you couldn’t pass up on a deal, but if you’re going to end up charging everything else to your credit card with no plan to pay off the entire balance when you get back, how is that a deal? Credit cards charge an average interest rate of 19.99%, you could up end up paying more in interest than what you saved on that “deal.”

Start saving

If travel is essential to you, then you need to set up a dedicated vacation fund. Every month, set aside a set amount that’s automatically transferred to your travel fund. $25 a month won’t go very far, but the idea is to get things started early. If you can bump your savings up to $100 a month, you’ll have $1,200 at the end of the year which is a decent amount of money for a trip.

If you really want to motivate yourself, you could work backwards based on your estimated trip costs. Let’s say you plan on taking a trip to Thailand in a year and you’re expecting the trip will cost you $2,100. That means you need to save $175 a month to stay on budget.

Ideally, you want to park that money you’re setting aside in an account that’s going to earn you some interest. Alterna Bank has a Tax-Free eSavings Account and High Interest eSavings Account that both pay 2.35%* interest. Both accounts have no fees and no minimum balance requirement which makes it the perfect place to park your money until your trip expenses come up. Alterna Bank has consistently offered high interest rates with no gimmicks and no teaser rates to lure customers in. Not familiar with Alterna? They were rated the top TFSA and RRSP accounts in RateHub’s 2018 Personal Finance Awards and they’re a CDIC member so you know you’re money will be in a good place.

Be smart about where to minimize your costs

I’m all for saving money on vacations, but I don’t believe in cutting costs if you’re going to sacrifice experiences. During my younger days, I would eat as cheap as possible and try only to do free attractions. As a result, I didn’t try tapas the first time I was in Barcelona nor did I see the Book of Kells in Dublin. Even though I saved money and still had fun, I regret both of those decisions.

I’m not suggesting you should splurge on everything, but I think you need to be smart about where to minimize your costs. For example, if you’re a foodie, don’t cheap out on dining. Instead, try to cut back on your accommodations or don’t have alcohol with every meal. Alternatively, if you like museums, pick one or two that you’re willing to pay for and skip the rest. Better yet, see if the museums have any free days or if the city offers some kind of museum pass which will help you save money on the admission cost.

Use credit cards to your advantage

I realize that I said using your credit cards could ruin your vacation budget, but when used responsibly, credit cards can be an incredible way to save you money. Take a look at my list of the best credit cards in Canada. Just about all of them offer at least $250 in signup bonuses and then there are the additional benefits such as travel insurance, companion tickets, and lounge access that can also save you money.

With travel credit cards, you earn points on all of your everyday purchases. Once you accumulate enough points, you can use them towards your travel which will offset your costs. This strategy only works if you’re responsible with your spending and you always pay your bills in full and on time every month. It doesn’t matter how many points you’re earning, paying interest is never worth it.

Final thoughts

Planning a vacation without going into debt should be easy, but one small misstep and you could be spending more than you anticipated. Follow the above tips and budget a little more so you have a buffer and you won’t need to worry about your finances while you’re on holidays.

*“Interest is calculated daily on the closing balance and paid monthly. Interest rate is annualized and subject to change without notice.”

How to Plan a Vacation Without Going Into Debt

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