A Guide to Vacationing on the Baby Steps

4 Minute Read

While you’re working on getting out of debt and progressing through the Baby Steps, you might wonder how vacation fits into the plan. Like, when is it reasonable to plan for a weeklong trip to the beach, and when does a staycation make more sense?

If you’re asking those types of questions as summer approaches, we’re here to help! Here are some general guidelines to help you work through vacations during the Baby Steps.

Baby Steps 1 and 2

If you’re on Baby Step 1 or 2, you’re either building a $1,000 emergency fund or paying off your debt. Your budget is probably tight—especially if you’re paying off debt aggressively.

So your options might be limited, but that doesn’t mean you can’t have a fun, relaxing vacation. You know all about the staycation—keeping it local and inexpensive. Get creative!

If you can manage—and budget for—a short weekend getaway, then go for it. Just remember, the beach and the mountains and all the fancy resorts can wait until you’re out of debt. They’ll still be there, and they will be an awesome reward for busting it and getting out of debt.

Baby Step 3

With Baby Step 3, you’re out of debt and starting to save your big emergency fund, which is three to six months of expenses. Now you can take a little bit of a breath.

You’re still saving aggressively and putting all that money you were using to pay off debt toward the emergency fund. But you are also in a good situation where you can take a little bit of that and go on a vacation paid for with cash. No credit cards here. You’ve come so far!

As a motivator, find a photo of the vacation spot you want to go to when you reach Baby Step 3. Put it on the wall, the refrigerator, or your desk at work. But remember, you’re still saving for an emergency fund. Don’t go crazy with spending! 

Baby Steps 4 through 6

When you’ve reached Baby Steps 4 through 6, you’re in an awesome spot. You’re out of debt, and you’ve saved up a large emergency fund. You’ve started the process of investing 15% of your household income into a retirement  account, and you’ve begun saving for your kids’ college funds. You’ve started trying to pay off your mortgage as quickly as possible.

An annual summer vacation isn’t a problem anymore. Just put it in your budget, save up for it each year, and pay for the trip with cash. Your income will still determine what’s reasonable for you with vacation spending. Higher earners will obviously be able to afford pricier vacations, but the point here is to go somewhere debt free and enjoy yourself.

And remember what it was like back during Baby Steps 1 and 2 when traveling for vacation wasn’t really an option!

Baby Step 7

This is the ultimate! When you’ve reached Baby Step 7, your focus is on building wealth and giving a bunch of it away.

So you know where you can go on vacation? Wherever you want! Paris? London? Tahiti? A two-week African safari? A European cruise?

You have nothing holding you back now. You’re totally out of debt, including your house, and you’re saving and investing to the max.

You’ll be able to save for really nice vacations quickly, especially if you’re still earning a good income.

Have fun! Take some friends with you on some of your vacations. Be an encourager and a motivator to people who haven’t reached this point in their journey yet. Be generous with your money and even more generous in your spirit.

Everyone’s journey will be different. Some people are able to go through the Baby Steps quickly, while it takes much longer for others.

Stay motivated and focused on your goal. Vacations are awesome. But your long-term plan isn’t about just going on nice vacations. It’s about growing smart money habits for the future. Don’t lose sight of that this summer!