5 Steps to Save Money for a Vacation

Saturday, May 15, 2021 | Melissa Brock

If you're anything like me, you're ready to break out of your shell and go on a looong trip, never mind these short trips we've taken within our tri-state area. 

Think you might need some pointers to figure out where to go and what to do next? Because let's face it: We're all out of practice. Check out this guide to determine the best way to save for a memorable trip.

Step 1: Figure out how much you need to save.

How much will you save for your vacation, and can you save on the trip itself? The last thing you want to do is spend three years paying on credit card bills for a trip that remains a distant memory. 

In 2018, a family trip cost an average of $2,256 and over 7 in 10 families (71%) planned to spend over $1,000. Put together a budget as soon as you decide you want to go on vacation.

  • Can you stay with friends and family on one leg of your journey? If your sister lives in Chicago and you can stay there instead of getting a hotel the night before your flight, take advantage of her extra room, even if it does smell like Eau de dog.
  • Get the right flight. Check into a flight tracker app to learn when flight prices go up and down. 
  • Get flexible. If you don't need to schedule specific dates for your trip, you can hunt around for cheaper tickets, hotel stays and more.

Your budget should include airfare, car rental, luggage fees for the airline, meals, activity costs, travel insurance, accommodations and other needs for your trip.

Step 2: Implement some savings tactics.

You can combine a couple of savings methods to plan your trip of a lifetime. First, determine the amount you'll need to save for your vacation and subtract the money you currently have saved (and would like to spend) from the total cost of the vacation.

  • Get a money market fund or savings account going. Direct 90% of your paycheck into checking and the remaining 10% into a savings account. Do your research and open accounts at a bank offering free or no-fee checking. Maybe you want to invest in another less risky short-term investment. What makes sense for your vacation savings? 
  • Save your spare change. Save your spare change in a coffee can or a 5-gallon water jug. Don't touch the money until the receptacle is full. Or you could go high tech and save your spare change using Acorns.
  • Ask about sales. Ask hotels when it will cost less to book or travel during off-peak times. I remember visiting North Carolina the first week of June and wondering where all the people were. Lucky for us, the "summer people" hadn't yet arrived. The whole of the Outer Banks was our playground. 
  • Use promo codes. Some websites allow you to use promo codes when booking.
  • Use credit card miles and points to your advantage. Try to get a card that offers reward points in airline mileage. Use this card for your regular spending and pay it off at the end of each month and watch the free miles add up.

Step 3: Determine how long you'll need to save.

So, saving for something doesn't always happen overnight, does it? It might take you six months (or more!) to save for a big vacation. Let's say you've determined you can afford to save $150 per month and that your vacation will cost you $5,000. You'll need to save for 33 months (just under three years) to save that amount. 

If you think you might want to go before that, see if you can rejigger your savings amount to make your trip a reality. Bumping your savings up to $300 per month will net you $5,000 in 17 months. 

Saving sure beats putting your entire vacation on a credit card and staying in debt for years!

Step 4: Save in other areas of your life.

Use an expense tracker app such as Mint to see how much you regularly spend on needs and wants. Mint can tell you what you regularly spend money on — and will even tell you if you've spent "more than usual" that month. At the end of each month, you can figure out where to spend less in a single glance.

A few common ways you might overspend: 

  • Extended warranties 
  • Unnecessary life insurance
  • Cellphone apps 
  • Rental car insurance (keep this in mind when you travel — you usually don't need to get rental car insurance!)
  • Private mortgage insurance
  • Cable and internet services
  • Clothing
  • Kid stuff
  • Unhealthy things (like cigarettes)
  • Gym memberships
  • Going out to eat regularly

Knowing where to trim your budget starts with knowing where you spend an excess amount of money.

Step 5: Dig deep and stick to it.

It's easy to get off track. For example, the vacation fund might go first if the car breaks down. Or if you have a gigantic water bill from a broken toilet. Try to resist the temptation to tap into your hard-earned (and hard-saved) money for your trip. 

However, if the unthinkable happens and you do have to spend some of that money, figure out your plan to catch up on your trip contributions. Maybe it involves chucking an additional $50 toward your vacation fund over a few months. Maybe you'll use your tax returns to make up the difference. Whatever your method, don't lose sight of your goal.

Fund Your Dream Trip

You'll still pay money to fund a vacation, whether you decide to go camping across town or sink big bucks into a vacation in Europe. (Obviously, the fancier your vacation, the more you'll spend!) With a little bit of hard work, you can make sure you have the vacation you've always wanted. It might also take you a little bit of time to put together a savings plan and actually follow through with it. 

Sticking to savings fundamentals can get you back on track after not having traveled for a while. I've been staking out VRBO for months, planning for the next big one. Totally can't wait.

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