Even when there’s snow outside — or perhaps, especially when there’s snow outside — many of us are thinking about a summer vacation. Summer is a wonderful time for a holiday. If you have kids, it may be the only practical time to go on vacation, and even if you don’t, there’s still something about warm air, 9 P.M. sunsets, and cicadas humming that just makes us want to forget work and relax.

Whether you take your vacation in summer, prefer a winter getaway, or another time entirely, it’s important to plan your holiday. You can leave some room for spontaneity, but when it comes to finances, it’s wise to plan things out.

8 Tips for Planning a Summer Vacation

There are few things more disheartening than planning the perfect vacation, only to realize there’s no way you can afford it. Or worse still, taking a holiday and then crashing back to reality when you look at your credit card bill.

To have a truly relaxing and fun vacation, it’s necessary to map out the important things first. You don’t want to worry about money when you’re on vacation, so here are eight tips for planning the perfect holiday:

1. Establish What You Expect To Earn Over the Year

If you have a salaried position, then this is easy: the answer is just your annual salary (and that of your partner, if applicable). If you’re self-employed, this may take more work. It might be useful to look at your tax returns for the past three years and average out your yearly income. Remember to use the post-tax figure and adjust for any major change over the years (such as a change in job). It’s always wise to err on the side of underestimating your earnings, just to be safe.

2. Add Up Your Expected Expenses

Once you find out how much money will come in, determine how much will go out. First, add up all the nonnegotiable expenses. This might include your mortgage, rent, taxes, insurance payments, grocery bills, and energy bills.

Then decide which discretionary payments are important to you. For example, if you really love one or more streaming services, then include those, because you know you won’t want to cancel them. Similarly, decide how often you want to eat out or buy clothing or a nice accessory for yourself.

3. Determine What You Need To Save for Your Long-term Goals

Now you can subtract your expected expenses from your expected income. Assuming you’re still in the black, then the number you have is what you can spend on a vacation, right? Not just yet.

Consider your long-term savings goals. How much should you save for retirement? For your kid’s education? For an emergency fund? It’s always wise to save before you spend.

4. Think About Where You Want To Go

Now all that math is out of the way, here’s the fun part: where do you want to go?

5. Establish a Cost Schedule for Different Possible Trips

Oh no, here’s more math. How much will that summer vacation cost you? You know much you can spend, so it’s time to figure out if your dream vacation falls within that number.

6. Don’t Forget Insurance!

Remember, it’s always better to have travel insurance and not need it than to need it and not have it.

7. Compare Your Vacation Options With Other Potential Big Expenditures

Do you really want a summer vacation, or a new car? A new mobile phone? Or a new washer and dryer? If this might be the year for a big expenditure, maybe it’s not the year for a big summer vacation.

8. Decide Which Summer Vacation Works Best for This Year

If you have several ideas, maybe you can go on a shorter, cheaper holiday this year and save up for your dream vacation next year.

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