A new year brings New Year's resolutions which, for many of our readers, will focus on how to save money for travel.
Saving money can be a daunting task.
But as with most of life's challenges, pick it apart and it will be easier to solve. Even if the ability to save was not bred in your bones, it can be learned.
Below you'll find my step-by-step plan to save money for the travel of your dreams. Even if you don't yet know where you want to travel you can be pretty sure that the impulse to travel will surface again soon.
Here's how to plan financially so that when it does, when you feel that visceral need to travel, your bank account says yes.
14 Ways to Save Money for Travel
Money can buy happiness. You just have to spend it in the right way and on the right things. This book is available on Amazon.
Everyone is different. What one person gives up to save will be different than another. So, I'm not going to tell you to take shorter showers or stop buying lattes. The specifics of how you save are up to you.
But in another way we are all similar. We tend to spend as much money as we have, making the process of saving similar whether you earn $25,000 or $250,000 a year.
Best Ways to Save for a Trip
Here are the steps that everyone needs to work through to save money for travel.
- You can't save without knowing what you spend. A couple of years ago I tracked and categorized every expense I had for a few months and discovered that every month, for some reason or another, I had about $800 in surprise expenses. Yikes. No wonder I couldn't save – I was being blindsided all the time. To save money for travel, start by tracking every cent you spend. Categorize those expenses and include a category for the unpredictable.
- Set your financial travel goal. Research the trip you want to take. Get a sense of what it will cost, then round up the number. There are two reasons for rounding up. One is so that you have a nice simple figure in mind as your goal. The second is so that you have some space in your travel budget for it to stretch as it will almost inevitably do. The bigger the actual cost of your trip the bigger the round-up. For example, $8,750 doesn't become $9,000, but rather $10,000. This is because there are more ways to balloon the cost of a big-ticket trip than a small-ticket one. Read: How to Plan Your Solo Travel Budget – On Any Budget
- Overcome your objections to a budget. People often say that budgets don't work. But they can, especially if you do these two things:
- base the budget on the right information which is why you do Step 1.
- have a clear and wonderful goal in mind which is your dream trip, Step 2.
- Set your home budget. Since you have tracked your expenses you have the right information with which to set a budget. And because you have a wonderful goal in mind you're motivated. Now you can now set a realistic budget. In doing so, allocate all your income in some way or another, whether it's to an expense or savings. Then calculate and project how your savings will add up month over month. There are many free budget templates on the internet. Here's a Google Spreadsheet Budget template. Find one that suits you.
- Modify if necessary. Will your projected savings reach your financial goal in the time you want? If not, either review your budget and decide where to cut or modify your trip plans to align better with your financial situation. You can do this in a number of ways. Read:
- Get the Best Deals on Flights: Here’s How
- Save on Hotels? Yes You Can with These 10 Tips
- Free Accommodation: House Sitting Tips for Sitters and Home Owner
- No Single Supplement: Avoid the Solo Surcharge
- How to Save on Shoulder Season Travel: Top Tips
- Travel Essentials: Cheap, Free and Cheaper than Free
- 25 Travel Money Mistakes and How to Avoid Them
Choices that will Help You Save and Travel More
- Imagine living your dream trip every day. Screensavers are great for this. When doing your trip research find a photo that really inspires you. Right click on the photo, save the image to your desktop and make it your desktop picture. Print out a copy and put it on your fridge. Get an Instagram account and follow a hashtag for your destination. Keep your motivation high by having your trip all around you. (You can also follow Solo Traveler on Instagram.)
- Take a minimalist approach. The minimalism trend is about having what you need and no more. Or, if more, it's because there is something that you really, really desire. You may consider books an absolute must in your life. Then have more books than necessary. But before making any purchase, give it serious consideration. How much do you need it? Could you borrow or rent it instead? How much will it contribute to your happiness?
- Save money day to day. How you save money will depend on your lifestyle but make it a habit and a daily practice. How much you save daily will depend on your income and how you spend. Find ways to cut back $5 a day to contribute $25 per work week over and above what you already plan to save based on your budget. If you buy lunch and take taxis every day, $40 a day is a possibility for you. That's $800 a month!
- Pick a bank and credit card that give back. Choose a bank with low fees to save a bit more every month. Some, like Tangerine, will run campaigns where you can earn bonuses for referring a friend. Read Deciding on the Right Travel Rewards Credit Card
- Set up a travel savings account and an automatic withdrawal just for travel. Having a separate savings account specifically for travel lets you see your progress towards your travel saving goals. Having an automatic withdrawal from your regular account to your travel account ensures that you save to it regularly. $20 a week is over $1,000 a year. $100 per biweekly paycheque is $2,600 a year. Direct funds into this account on a regular basis and give it a bonus deposit when you can.
- Know what kind of spending makes you go off the wagon. Some of us spend more if we have cash than if we use credit cards. Some are the opposite. Others whip out the debit card without thinking. Know what form of money you are more likely to spend frivolously and don't carry it.
- Tell people about your trip plans. Declaring your big goal will help you achieve it. Discuss your trip plans with others. Get recommendations from people who have already been. Bringing your travel dreams into the light will make them more real, make you feel more accountable and more driven to success.
- Use loyalty programs wisely. Airlines, credit cards, hotels… there are many opportunities to save points that equate to dollars to spend on or save for travel. Sometimes there are opportunities to save these points in more than one way at once.
- Ask for money. Rather than gifts, ask family and friends to give you money for birthdays and other special occasions. They could pool their money into one gift for a flight. They can put it in a brochure to make it a little more personal. Not everyone likes giving money but when it helps make a dream come true, people will be onside. Take every $5, $10, and $20 bill and stash it away in your travel bank account.
Saving money for travel can be a challenge regardless of how much or how little we make. But knowing that you can meet this challenge and how to do so will make it a reality.