Posted on: Sunday, May 11, 2003

Vacations should be part of family budget

By Frank Bilovsky
Rochester (N.Y.) Democrat & Chronicle

Vegas. The Cape. Walt Disney World. The Finger Lakes. Virginia Beach. The Adirondacks.

Wherever the destination, people are thinking summer vacation. What some might not be thinking about is how to pay for that annual family trip. For more than a few, it's plastic now, pay later.

And that's a big mistake, financial advisers say.

The best way to handle a vacation is by making it part of your budget, says Cheryl Johnson of Sutter Johnson & Associates, a branch of American Express Financial Advisors.

"Have a separate account for it," she suggests, adding that in this low-interest environment, an old-fashioned passbook will do the job as well as a money market account. Either way, you'll be fortunate to get more than 1 percent annually.

Stephen Brewster, a 31-year-old computer programmer from West Henrietta, N.Y., uses a savings account to finance major vacations for his family. He adds to the account annually, mainly from his income tax refund.

Typically, the Brewsters will spend between $700 and $1,000 on a summer camping trip for a week in Maine or the Catskills.

"Last year we splurged on Disney World. But again, I didn't have to save up because I had a reserve of savings," he said.

On the other hand, Jamey and Kelly Sutton of Prattsburgh, N.Y., have money withheld from Jamey's paycheck to pay for their vacations.

"He's a union worker and he has a personal account where he's allowed to take out money for vacation," Kelly said.

George Kauffman, an adviser with Waddell & Reed Financial Services in Chili, N.Y., agrees that saving something out of each paycheck — he suggests putting it in a bond fund or mutual fund — is the best way to accumulate vacation money.