“We’d like to take a REAL family vacation…..one that does not involve visiting relatives!” I can’t tell you how many times I hear couples dreaming out loud about this in a financial planning session. “Just one week in Hawaii…”

Here’s your end of the year challenge: Commit to making it happen by this time next year. Seriously!

I know, everything right now is doom and gloom about the “recession,” the second Great Depression, the mood swings of the stock market…..does that mean Family Fun has to go on hold while we vigilantly watch each dollar and sit home to make sure we don’t overspend?

I sure hope not.

You may ask, “Isn’t it irresponsible to take the gratification of a vacation rather than save for your child’s education? Is that selfish?” If you do not understand your spending enough to know that you can take a vacation without long-term consequences, then guilt may have a place in your situation. But, no matter what, if you plan ahead, you will be able to take a family vacation you can feel good about in any economy.

How to Vacation Without Guilt:

• Start with making a conscious choice. Sit down with your partner and DECIDE that you are going to take a family vacation. Get on the same page before the saving starts.
• CLEAR your mind of any preconceived notion of where you will go (we’ll get to that part later).
• Determine HOW MUCH money you feel comfortable spending on a trip that you would take within a year. This means the amount you could spend without guilt. Remember that finances change all the time — so this is about what amount do you feel comfortable spending this next year. Future years are a different story and whatever you’ve spent in the past does not count. You are only focused on what makes you comfortable this time around. This is where it is extremely helpful if you understand your full financial picture. If you are worried about a job loss, then maybe your number is lower. If you have a solid Emergency Fund and good Retirement savings, maybe it is a larger number. For this example, let’s say it is $5,000.
• Decide WHEN you want to go. Let’s say August 2009. BLOCK your calendar now even without knowing the details. This eliminates the easy “scheduling” excuses to forgo a vacation.
• If you are starting from zero, CALCULATE what this means in terms of monthly contributions to an account. Let’s assume there is no “interest” on the account since you keep it in a checking or savings account in cash. To go on a trip in 8 months that costs $5,000, you would need to set aside $625 a month. Check-in: Does that sound like a lot of money to you, or just the right amount? Could you “afford” more? Do you need to change this number? Remember, this is about finding the amount that will let you take a satisfying vacation without worry!
• START the money flow. Set up a separate (untouchable) account dedicated solely to your Family Vacation. The best way to make sure you take a vacation and make sure you don’t fall victim to the “we have to save for other things” mentality that keeps many parents in their living room is to allocate funds directly to a Vacation/Travel Account. Either do direct deposit from a paycheck or set up a monthly transfer to this account from your checking account.
• Now that you have set up the funds you get to decide WHERE and HOW LONG you want to go. This is the fun part. You know what you can spend, so you can start exploring. Take your investment number (e.g., $5,000) and divide it by the number of days you want to vacation. So if I want to take a 7-day vacation, I would have $714 a day ($5,000/7) to spend. Start investigating airfare (divide cost across the # of days), hotels, and activities to see what fits. While Hawaii tops many West Coasters’ lists, depending on your “number,” you may have to go another route if funds are tighter this year. Maybe your family vacation is a week at home touring the Bay Area sights you’ve always wanted to see.
• Once you decide where your vacation is, FIND pictures and visual reminders or your destination. You don’t have to pay for the trip yet (you can book it at whatever lead time is appropriate for your trip), but you will have selected a destination. HANG UP the pictures in a prominent place in your home. Seem silly? Move on to #9 before you judge…
• Now back to your monthly spending. Decide if there are trade-offs you will need to make to be able to meet your vacation investment number. What behaviors are you willing to change for the next 6-9 months (not forever!) to meet your vacation goal? Write down your commitments for the changes you will make. Have your partner do the same. HANG UP these statements next to your vacation pictures (from #8). This will keep you focused on your vision when short-term spending decisions get cloudy or tempting.
• When vacation time arrives, RELAX and enjoy this cherished family time knowing that you have given yourself full permission to spend a chosen investment without any guilt.

I advocate for setting yourself up for a secure financial future while also creating lasting memories and experiences along the way. In the midst of the financial angst of late, make sure you remember to forecast for family fun, too!