Planning for and taking a vacation can be the highlight of your year. In a recent study, 97% of people said just having a trip planned made them happier.1 But if you’re on a tight budget, saving for vacation can seem out of reach. Planning early is one way to minimize financial stress and help you get excited about your trip.
Fortunately, you can take steps to budget for a vacation and work toward that goal just as you would with any other financial goal. “The best way to save for a vacation without breaking your budget is to plan ahead,” says David Fowler, certified financial planner and founder of High Mountain Financial Coaching.
Follow these seven steps to create a manageable budget—and get ready to take the trip you’ve been dreaming about.
Table of contents
Figure out what your vacation will cost
Roundtrip transportation costs
Getting to and from your destination can be a major part of your vacation expenses. And you have options that will all affect your budget in different ways.
Airfare: Search for flights to your destination on specific dates or, if your trip is far enough away, by season. Flight prices have gone up a lot lately, with the average ticket costing over 26% more than in 2022.2 But you can set price alerts to notify you when costs come down or great deals come up. And don’t forget about fees. If you are taking a ski or golf trip that requires gear, you may need to check multiple bags. Buying a seat with more legroom or even just choosing your seat on a plane can cost extra. Make sure to read all the fine print and tally up how much everything related to the flight will cost.
“Low-cost carriers can be great for customers because they get to choose what they want and what they don’t,” says Kyle Stewart, director of Scott & Thomas Personalized Travel. “However, if you check two full bags, take a carry-on, get a drink on the plane, and use WiFi, then a flight with Southwest might be the right choice over a low-cost carrier like Frontier,” he explains.
Driving: Another option is to consider a road trip. Depending on how far your destination is, driving could save you the cost of a plane ticket, round trip taxi to the airport, and parking at the airport. Determine a ballpark number for your gas costs as you make your vacation budget. For example, if you drive 800 miles and your car gets 25 miles to the gallon, that is 32 gallons of gas you’ll need to budget for. Gas prices change frequently, so check the average for the area you plan to visit. Also factor in the cost of any oil change or maintenance your car may need before hitting the road.
Transportation at your destination
Rental cars: If you do fly, will you need to rent a car at your destination? Look to bundle flights and rental cars if you know you will need both. Car rental prices are up just like other costs, but the location you visit can make a difference. The average weekly cost of a rental at Orlando airport $517, while at Chicago O’Hare airport, it’s $743.3 Also consider where you will park your rental car. Does your hotel or short-term rental have free parking? How much would a garage or street parking cost? You will want to plan for those costs in addition to the cost of the rental and gas.
Public transportation & rideshares: Whether you travel by plane or car, think about whether you might need to jump on a train or take a taxi or rideshare. You can check train fares online, and if you will be cabbing around a city at busy times, plan for peak pricing.
Non-transportation costs
Lodging & food: Price out your time staying in a hotel or a short-term rental. The total cost will, of course, depend on where you travel, but the current average hotel room cost is $212 per night.4 This is another time to check for fees. Some hotels charge “resort fees” or for in-room amenities like bottled water. If you’re renting a house or apartment, check those fees as well, for things like cleaning or a non-refundable deposit.
One way to save is to reserve a room or rental with a kitchen so you can cook some of your own meals. You can store snacks and pack lunches for your day trips, which can save a lot compared to buying those extras. If your vacation includes visiting the outdoors, you can look into camping for another low-cost option.
The best way to save for a vacation without breaking your budget is to plan ahead.
David Fowler, certified financial planner, founder of High Mountain Financial Coaching
Entertainment & extras: What are you planning to do on your trip? Are there sporting events or other tickets to buy? Are you hoping to sample fine cuisine or visit local attractions that may have entrance fees? Factor all of that into your budget as you plan it. Consider purchasing entrances in advance and looking into city passes for additional bundling and discounts.
Passports & fees: If you are traveling to a foreign country, make sure you have a passport and that it’s not close to expiring. Passport fees usually run over $100, and foreign countries may also require currency exchanges, or assess higher ATM fees if you plan to take out cash. Make sure you look into the details when planning your vacation budget.
Pet care: If you’re not bringing your pets with you on your adventure, remember to factor in the cost of caring for them while you are away.
Consider off-peak travel
Let’s say you tally up the cost of your vacation and it’s starting to look a little too expensive. Then what? Don’t just cancel your trip—rethink how you can cut some costs.
Consider traveling off-season. Many destinations are just as enjoyable at different times of year. And they may be less crowded if you go outside of busy season. Traveling at off-peak times, or even just changing your flights to midweek, can make a big difference with costs.
And don’t be afraid to get creative. Is there somewhere off the beaten path you can visit? Maybe something a little closer to home so you can save on transportation costs? There are lots of ways to bring costs down if you keep an open mind.
Calculate how long it will take to save
Consider using a savings method like the 50-30-20 rule. This means you divide your income into three categories. Take 50% of what you earn and pay for your needs, such as bills, debt payments, food, childcare, and other necessities. Then 30% goes to your “wants,” and 20% goes to savings.
“People using the 50-30-20 rule should commit the entire 20% to emergency savings and retirement funds, and their vacation account should be funded from the 30% ‘wants’ bucket,” Fowler says.
Once you know how much money you can put aside every month, you can see how long it will take to reach your vacation budget goal.
Let’s say your vacation budget is $1,800 and you have $200 each month to save for it. Divide the vacation budget amount ($1,800) by your monthly amount ($200). The result is nine, which means it will take nine months to save up what you need for your vacation.
Open a separate account for vacation savings
You can choose a new savings account or checking account to put money away just for your trip. Set up automatic transfers from your paycheck to make the savings process easier.
A high-yield savings account can earn interest on the balance, so you earn extra money just by putting your savings into one of these accounts. This can be a great way to increase the amount of money you’re saving. But the most important thing is to set the vacation fund aside in its own account so you don’t end up spending those funds.
Earn extra money for your vacation fund
It never hurts to bring in a little extra income, especially if you are planning for a vacation. Consider holding a garage sale or yard sale. You can clean out your clutter and make some extra money at the same time.
You can also pick up a side hustle to grow your income and use the extra money for your vacation fund. And what about that raise or an end-of-year bonus at work? Commit to saving that for your trip and you’ll be even closer to your goal.
Explore a personal loan
Think about whether it will take you a very long time to save up enough for your trip. If you don’t have this kind of time, there are many ways to pay for an upcoming vacation.
With the right plan and the right tools, you can take that dream vacation and make lifelong memories. “The important thing is that you have a system, you stick to it, and make sure you take those vacations,” says Fowler. “Life is too short not to see, do, and live the experiences you dream about.”
If you need a little extra help, look into a Discover® personal loan. One set regular monthly payment and a fixed interest rate can help you manage your budget and take the trip you’ve been dreaming of.Learn More About Vacation Loans