Vacations serve as much more than just a way to relieve our wanderlust — taking time away from work can help ease everyday stress and return us to our regular lives relaxed and reinvigorated.
However, in light of the COVID-19 pandemic, many people have had to put travel (especially big trips to other countries) on the backburner. While putting these trips on hold has been tough, the silver lining is that you may be able to save up even more for that dream vacation. What’s more, studies have shown that people tend to be happier when they have a vacation on the horizon.
Whether or not you’re already planning your next big trip, if you’re on a tight budget, saving for a vacation can seem daunting. Planning early is one way to potentially minimize financial stress and also get excited about your trip. The following five steps can help you set up a realistic travel budget, as well as figure out how to trim your expenses to make it work.
1. Create a reasonable travel budget.
In order to ensure that you have adequate savings for your trip, consider creating a good travel budget that includes a number of items. Your mode of transportation and accommodation are obvious financial considerations, but remember that things like food and entertainment can also add up quickly. Once you estimate how much your dream vacation will likely cost, you can start considering how to minimize expenses as well, if that’s necessary. You might, for instance, stay at a place where you can cook most (or at least some) of your meals. Or plan a vacation to a destination where a lot of entertainment could be free, like the beach or a city with free museums.
2. Comb through your current budget for savings opportunities.
Next, look through your monthly budget for areas where you can cut back. For example, maybe you’re spending unnecessarily on things like subscription services, or perhaps you can cut back on discretionary spending like getting takeout meals or your clothing budget.
Trimming your current spending is one of the easiest ways to save for a trip. It is critical that you don’t borrow from any of your essential or important expenses, like retirement or emergency savings. If you already have enough in savings (experts recommend an amount worth at least six months of expenses — here are some suggestions on how to get there if you haven’t started saving yet), then diverting some of the money you would normally put into savings into a travel fund is another way to temporarily save for something like a trip. You can also plan to put any windfalls — like a bonus or large cash gift — towards your travel plans, as long as your other essential buckets are covered.
3. Set up travel-specific savings.
The more you can save up to cover your vacation in cash ahead of time, the less likely you’ll be to go into debt if you end up putting more on a credit card than you planned.
Depending on how much time you have before your trip, you might consider opening a new high-yield savings account and putting a little bit of money into it each month specifically for travel. Divide your travel budget by how much time you have before the trip to figure out how much money you need to set aside each month, then set up an automatic direct deposit into your travel savings to do so. Doing it this way ensures that if you want to take a trip that costs more money, you can do so, as long as you give yourself enough time to save up for it.
4. Keep an eye open for deals.
Traveling at off-peak times can save you a lot of money. If you can travel in the middle of the week or a time other than the holidays, you could find deals on things like airfare and accommodations. Booking your trip in advance can also shave some of the costs of traveling since last-minute trips can be pretty pricey. By researching the best time to travel, you can ensure that getting to your destination and where you stay take up as little of your overall travel budget as possible.
5. Factor in some wiggle room.
Any budget is an estimation, and it’s always a good idea to factor in some wiggle room, especially when it comes to travel. Unforeseen or forgotten expenses always crop up — like taxes, tips and gifts or souvenirs — and you’ll feel less guilty about spending money on these things if you’ve padded your travel budget to cover them.
At the end of the day, with a little ingenuity, planning and time, your dream vacation can be possible. If you need a little extra help financing your dream vacation to make it a reality, there are other fiscally smart ways to get there. With flexible repayment schedules and quick access to funds, a Discover personal loan can help you plan ahead so that your dream vacation doesn’t end up costing you more in unforeseen expenses.