This article first appeared on U.S. News and World Report Money.
My daughter has dreamed of going to Paris for as long as I can remember. In kindergarten, one of her major art projects involved a paper sculpture of the Eiffel Tower. She’s watched Ratatouille more times than I can count. Whenever she has a chance to pick up a French phrase, she does so.
Nothing would make me happier than being able to take her to France for a week or two when she’s a bit older, most likely as a family vacation.
When I look at the prices, though, I balk. A round trip ticket from Chicago to Paris is right around $1,000. If five of us go, it’s going to cost $5,000 just to get us there. That doesn’t include all of the expenses involved with a family of five spending significant time in a foreign country.
Any realistic budget for this quickly jumps into the five figures to be on the safe side. For most families in the United States, that’s a lot of money to come up with.
Is it worth it? As painful as that dollar amount seems to be, I truly view opportunities to show my children the world as they’re growing up and developing as people to be invaluable opportunities.
The question really comes down to this: how can an ordinary American family balance the cost of five-figure travel with the need to keep our day-to-day finances in order?
The solution is simple: plan way in advance.
For example, our family plans on taking this Paris trip in six years. We’re also planning three other international trips for the years immediately following the Paris trip.
Our first step is to budget each trip. What will it cost? We checked out travel guides from the library to get a sense of what we roughly had in mind for the trips and to get a sense of what it would actually cost.
Similarly, what’s our best estimate of what inflation will add to the cost of those trips? We’re not traveling next year, so inflation will be a real factor here. We use a 5%-per-year inflation factor when figuring out these budgets.
After this research, we’ve got some numbers to work with – an amount for each of the trips we dream of for our family. 38880 8160
The next step is to set up a savings plan to achieve these goals. What do I need to save each month in order to reach these goals.
Let’s say I need to save $15,000 in six years, $17,500 in eight years, and $20,000 in ten years, hypothetically. These would be reasonable family budgets for international travel down the road.
For the first goal, I would have 72 months to save that much, so I’d need to save $208 per month. If I assume that I’ll be earning at least a little interest, I can easily slice that down to $200 a month.
For each of the other goals, I can save a little less each month. The second goal would require only $180 per month, while the third goal would only require $160 per month with similar rounding.
Now, these goals would be simultaneous, so that would mean, in theory, that you should save $540 per month for the first six years, $340 per month for the next two, and $160 per month for the final two years. Alternately, I could simply put $420 per month into a savings account and just cover each trip as it arrives.
Depending on your financial state, $420 per month may seem like a lot of money to pay for three trips far down the road. However, saving a much smaller amount each month starting now makes those trips easy to handle down the road, while not saving at all would make those trips an incredible financial burden when the time comes.
Another principle worth using is to reduce the cost of travel now so that we can afford better travel later. We do a lot of summer camping instead of lengthy trips, and when we do go on larger trips, we usually stay with friends and family to keep costs low. This enables us to put our annual travel budget towards those large trips down the road instead of spending now.
The important thing to think about with long-term goals like this is that the end goal will arrive sooner than you think and you’ll be incredibly glad to easily achieve that goal when the time comes. The money you save each month won’t have an incredible impact on you now, but down the road, the money you saved will open the door to an incredible opportunity for your family.