Planning a Honeymoon – Save Now or Pay More Later

Monday, February 13 at 10:20 AM
Category: Personal Finance

If a honeymoon is in your plans, you should consider the financial aspects along with all the details of your trip. Those issues are how much the honeymoon is going to cost and how to pay it.

Costs of the Honeymoon
The actual costs will depend on the type of trip you plan. But, probably at a minimum you will have transportation (airfare, car rental or public transportation), accommodations (hotel), meals, activities and souvenirs. 

Save Before You Go or Pay
More Later
The actual cost of your honeymoon will depend on where you go and what you do on your trip, and those decisions are up to you and your soon-to-be spouse. One of the best decisions you can make is to save the money you will need before you go. That way you can enjoy the trip without financial worry.
Here is a simple chart showing how much you need to save monthly so you will have what you need before the trip.

Start Your Automatic Savings Today
An easy way to save is with an automatic savings plan. Set up a recurring automatic transfer with your financial institution to transfer the amount you need to save each month into a separate account. You can also have your employer deduct the amount each month directly from your paycheck and deposit it into the account of your choice. 

Paying More Later by Using Your Credit Card 
As tempting as it may be to just charge your entire honeymoon to your credit card, there is a cost to doing so. Weigh those costs with advantages you may have by using your credit card. Benefits could include earning rewards points with every purchase, bonus earning periods like two times points on purchases, and travel benefits such as complimentary auto rental insurance. Rewards points can often be redeemed as cash back towards your credit card statement or towards hotel deals. 

Here is a chart showing what your monthly payments would be to pay off the honeymoon.

Your honeymoon should be fun and carefree. Saving before you go can provide the peace of mind knowing that the cost is covered and help you save a bit of money. However, if you use a credit card be sure to understand your rate, understand your payment plan and maximize benefits such as rewards earning opportunities. Consider the following:
  • If you are planning a $7,500 honeymoon and save for 12 months, your total cost will be $7,392 because you will earn some interest.
  • If you return from your $7,500 honeymoon owning that amount on your credit card and pay it off over 12 months, your total cost will be $8,232.
  • If you decide to use your credit card as a financial solution to plan a $7,500 honeymoon and it offers one point for every $1 spent, you would receive 7,500 rewards points. Depending on your credit card rewards rate, this could be equal to at least $75 in points possibly redeemable for cash back or statement credit.  
The decision is yours, but factoring in total costs and benefits will help you minimize honeymoon planning regrets in the long run.
Tags: Credit Cards, Financial Education, Savings
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