Using Your Tax Refund To Vacation? Read This First!

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Tax refund season. You either love it or you hate it. If you are one of the sixty+ percent of tax payers expecting a refund, chances are you love it. You are probably debating what you will do with your tax refund. Many families choose to pay off debt, others may choose to make large purchases. Many families however, use their tax refunds to book their vacations for the year. Before booking a vacation with your tax refund, be sure to read these tips.

Book vacation with your tax refund
Photo credit: Pixabay

Disclaimer: This post is sponsored by Allianz Travel Insurance. All opinions are my own. While this post is sponsored by Allianz, we are also paying customers.

I have a love hate relationship with tax season. In general, being a business owner means taxes are a lot of work for myself and a CPA. But the good thing is, that my family is still in a place where we tend to get a small refund each year (knock on wood). Each year, we like to put our refund towards our annual travel plans.

vacation with Tax Refund
Photo Credit: Pixabay

In conversations with my family and friends, it seems I am not the only one who uses their tax refund to help fund an extra vacation or two. If you are planning on using your tax refund on a vacation, you will want to read some of my tips first.

Why Book a Vacation With Your Tax Refund

If you are getting a pretty good sized refund, it can be hard to decide how to use it. I am all for paying off debt first.  Or paying some bills ahead to help ease your finances through the year. But if you have already paid off your debt, there is no reason why you can’t use your tax refund for a little extra fun this year.

There are several studies about the importance of taking vacations. Yet despite the research,  over half of Americans do not use all of their  vacation time. For some this is because they feel they can not take the time off of work, but for many the reason is financial.

take a vacation with your tax refund

There are so many great benefits to taking vacation that I could argue that taking them is an investment in your health, emotionally and physically. But I won’t. Instead I will just tell you there are plenty of articles that link back to studies about the importance of vacation.

So why book a vacation with your tax refund?

Well to start, for many of us, this is the only “extra” money that we will come into for the entire year. If you use vacation hacks, a $1000 refund can take care of an entire vacation for a small family.  It may not be a super luxurious vacation, but it will be enough to recharge and have some bonding time as a family or couple.

If you are one of the lucky Americans that gets several thousand back in a tax refund, you could take multiple vacations all year long. This is a great way to recharge during a long weekend, spend a week at the lake, and so much more. Booking these vacations with your tax refund also takes care of many of the expenses up front so you don’t have to cancel your plans due to lack of being able to come up with the funds before vacation.

Before You Book Vacations With Your Tax Refund

So most people quickly book one big vacation with their tax refund. If this is you STOP!!!! Do not do this yet. There is something you need to be doing before you book any vacation with your tax refund.

Stop before booking your vacation with your tax refund. Read this

Before you book your vacation there is one purchase you should be making. And then after I explain this, I will also explain how to help stretch your refund to take several vacations this year. So what is this purchase?

Travel insurance. I can hear your reactions in my head as I write this:

Why do I need travel insurance?

Isn’t travel insurance just for those families that travel full time like the Bucketlist Family?

Isn’t travel insurance expensive?

Ugh… I could use that money for something else because the chance of needing it is so small.

Really? My first purchase? A little dramatic, don’t ya’ think?

Why Travel Insurance Should Be Your First Vacation Purchase With Your Tax Refund

So let’s look at all those reactions you probably had when you read that travel insurance should be your first purchase.

Travel insurance for your vacation booked with tax refund

Why do I need Travel Insurance?

If you will be traveling at all this year, travel insurance is an important investment. Not only does travel insurance help cover if you need to cancel your travel plans (for covered reasons) it can also assist if you have travel delays or a medical emergency. Did you know that your health insurance plan may not cover you when you travel abroad. Or what if you need to come home from your destination? Travel insurance can cover everything from lost luggage, to delays and emergencies. It protects your financial investment as well as your physical well being when you are away from home.

Isn’t travel insurance just for those who travel full time, aka “nomads?”

This is a good question. Of course those who travel full time would make an investment in travel insurance. But no, it isn’t just for them. Travel insurance is for EVERYONE that travels. I first started purchasing travel insurance when I started using book before you know sites like Hotwire to book hotels. It was when I had to cancel a vacation for the first time due to not only a death in the family, but complications during my first trimester while pregnant with twins, that I realized how important travel insurance was to “regular folk.”

Travel insurance is for regular families
What if something happened to one of us while we are traveling?

What if I had gone on the trip and my complications started while we were on vacation? Or if my grandmother had passed away while I was on vacation? I had already needed to use my insurance for my prepaid booking, but had I been on vacation, I didn’t have coverage for the other costs I would have incurred.

That is when I realized it was important to get travel insurance directly through an insurance company like Allianz. Allianz covers my entire trip for so many different set backs that could occur when we travel. It feels good to know that we are covered.

Isn’t Travel Insurance Expensive

This is a tough one. Expensive to you may not be expensive to me, but I consider myself a cheapskate pretty frugal and I do not find that travel insurance is that expensive. Part of the reason is because we purchase an annual plan. Yep, you read that correctly. Just like you would purchase your health insurance for the year, we purchase an annual travel insurance plan.

There are annual plans that will cover anywhere you travel (over 100 miles from home) for an entire year. Not only that, they have different levels of coverage so you can find something that works for you in your budget. Our family purchases the premium plan so that our entire household is covered on any travel we take for the year. Sounds expensive right?

It isn’t.

Is travel insurance expensive
Photo credit: Pixabay

In fact, for us, the Premium Annual Plan costs us less than one roundtrip airline ticket from our home city to New York City. That is super affordable in my opinion. And with how much one hiccup can cost you when you are traveling, it is worth it. We have had a single setback in travel cost us upwards of $1000. Unfortunately, that was one of the trips we took before we really knew about travel insurance (which would have covered those costs).

I could use that money for something else. I mean, will I really NEED travel insurance.

I hope you never need travel insurance. I really do. But it is kind of like health insurance. You may not need it, but if something happens, you want it.

I mean, I get it. I am the type of person that scrimps on my vacations a lot. I cut a lot of unnecessary costs. It is one of the ways we travel all year long without going broke. But I don’t want to have something happen, be out going on my vacation, and then also be out all of the money that may not be refundable. Why take that risk?

A little dramatic to say this should be my first purchase, isn’t it?

I don’t think so. Here is why:

When you purchase an annual plan from Allianz first, then any trip you take is covered all year long. That means if you need to travel to a funeral, or if you decide to do a weekend get away…covered. You go camping more than 100 miles away…covered. And I know how it goes, you start looking at vacation prices first, you will spend your tax refund and forget to leave money aside for insurance. So buy the travel insurance first! And then use my money saving tips to book more than one vacation this year.

How to Book Multiple Vacations With Your Tax Refund

So now that we covered what your very first travel related purchase should be once your refund is in hand, let’s talk about how to make the most of your tax refund when booking vacations, so you can make this year a year of travel.

Make a list of vacations you want to take this year

plan vacation with tax refund

Take a moment to make a list of vacations you want to take this year. You can list dream vacations, weekend getaways, camping trips, and everything in between. Break them up into categories based on length and/or expense.

Then  it is time to start pricing out those vacations.

Price Out All Vacations, But Use Money Saving Tips

When you start pricing out vacations, start with the vacations that are the most important to you. Maybe that is a family reunion that you want to make sure to get to, or maybe it is a family vacation to Hawaii. Choose the one that you would be willing to give up all other vacations for.

When pricing them out, research all the money saving options. The big one for me is lodging. Lodging can save you hundreds of dollars. One way we save is using pay before you know sites, or even checking out alternative lodging options like HomeAway or Air BnB.

Also remember that traveling in the off-season for a destination is a great way to save money as well. Hitting up the Oregon Coast in spring when it is still cooler, or going to Disneyland during February, can save you a lot of money.

Fly versus drive with vacation
Fly or drive for vacation?

Next I look at if it is cheaper to fly or drive. Usually driving is cheaper for a family. But then I look at if it is a plausible option. If it will take you three days to get to your destination and three days to return, then the savings is probably not worth it. But make sure to check if driving is an option. Even if you don’t have a car that can make the drive, check into renting a car for your road trip, as it may still save you money.

Finally, check into some of the activities you will do, or set an activity budget. For a vacation to a theme park, you would factor in park tickets. A vacation to a city, you may just set a dollar amount that you will alot for activities.

Once you have a rough estimate of how much you will spend on that vacation, continue pricing each remaining vacation.

Do the math

Start figuring out which vacations you can book now to save you money. Chances are you can book one larger vacation and one or two smaller vacation. Make sure to add up different options to see if you can get more vacations in by switching up which ones you take.

Before you actually book a vacation with your tax refund, have this all lined out. That way you have a plan for where you will be going when.

When it is time to book, start with your preferred vacation in the group, and move on down. Pay for everything you can up front. Seriously. Not only will it usually save you money in the long run, but it makes it so you can avoid having to try to save money for the major purchases and can just save for your spending money.

If you are worried about cancelling, just remember that your Allianz policy may cover cancellations (depending on your plan). So you can book, save the money, and not worry about something coming up causing you to need to cancel.

Mark your calendars

Once you have booked your vacations, mark your calendars, put in your time off requests, and get your count downs on. Start planning itineraries and looking up fun, free, and worthwhile activities. Your vacations will be here before you know it.

So What Vacation Are We Booking?

So, you probably are wondering, what vacation are we booking with our Tax Refund. Well, our tax refund is going to be used to renew our Annual Plan with Allianz, and then helping pay for us to take one of our bucketlist road trips. We are excited to share this journey with all of you and talk about why we should all be making 2018 the year of travel. We will be announcing this vacation soon, so stay tuned! (Or go peak at my instagram account where I have already shared our official hashtag.)

*This post originally published Feb 7, 2018

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