How to Save for a Vacation

Vacations are notorious for serene views, exciting experiences, and a much needed break from the routine of everyday life. However, vacations are also known for their costs. You may have room for traveling on your bucket list, but that doesn’t guarantee you have room in your budget. After adding up the prices for plane tickets, hotels, car rentals, insurance, attractions, restaurants, souvenirs, and other vacation necessities, your bank account is likely to take a hit.

Luckily, the savings deficit from a vacation is potentially avoidable with a little preparation and travel-budget planning. After a few months of smart financial decisions, you may be able to take your dream vacation without breaking the bank. In order to achieve this, you’ll need to plan early, find extra income, and cut back some of your expenses.

1. Start your travel planning ASAP

Unless you’re taking a spontaneous trip, you’ll need to do some vacation planning ahead of time. The sooner you organize the details of your trip, the sooner you will be able to calculate the travel costs. Although some people can afford a vacation out of pocket, most will have to make room for upcoming travel costs in their existing budget. 

Create a timeline

The first step of planning a trip should be to set a timeline. It may seem like you should figure out how to pay for a vacation before you decide when you’ll want to go. However, having the trip dates in mind can allow you to develop a plan for saving money. It can also create a deadline for your savings goal. When you have a timeline, you’ll likely be more motivated to reach your financial goals.

Estimate your costs

Once you have a rough idea on when you will be traveling, you need to estimate the cost. You can use your cell phone to search different travel agencies and to compare price estimates on transportation costs, hotels, rental cars, food, attractions, and more. Figuring out how many people will be traveling with you is also an important calculation. Because you started planning early, you’ll also have time to consider weather and seasonal costs of your intended destination.

Budget accordingly

Once you know how much you’ll need to save, you’ll see how that figure fits into your regular monthly budget. Because of the timeline you created, you will be able to estimate how long you have to reach your goal. Adjust your monthly budget plan to include money for your vacation fund. Once you know this amount, you can even set up your bank account to automatically transfer the magic number to your vacation fund each month.

Ideally, the money that you save each month should go into a sinking fund, which is a savings account designated for a specific purpose. Unlike a regular savings account that you pull from for unexpected expenses, a sinking fund is used for planned purchases, such as your vacation or a new set of tires. It’s common for the sinking fund to be in a high-yield savings account, which has a higher interest rate than a regular savings account, helping your money to grow faster. This separate account will help ensure you aren’t tempted to transfer the money to a checking account and spend it on other things.

2. Find money in new places

When you start saving money for your trip, you’ll find that it may take a little longer than you expected. Adding one or more streams of income or utilizing rewards credit cards can help you reach your goals at a faster rate. You could pick up a side hustle or save unexpected money in order to grow your vacation funds.

Pick up a side job

It’s possible that you’ll be able to pay for a trip based on your current income, but you’ll likely want to add some breathing room so you can comfortably afford the trip. Adding a traditional part-time job, such as a retail or restaurant position, may be the best option for you. But sometimes, the time constraints of the typical work day don’t allow for another job, especially if you’re a student. Instead, you can pick up a side hustle with clearer expectations and less time commitments. Try freelance writing, making deliveries for a food delivery app, dog walking, or another side hustle to make extra money.

Monetize your skills

You may have a hobby or a skill that is unique, and chances are, you have the materials to begin making a profit off of it. For example, if you like to paint, you likely already have the necessary supplies: paints, brushes, canvases, and paper. You could possibly commission a few art pieces to make money for your trip. Similarly, if you like to help others with their schoolwork, you could tutor for cash. Converting one of your skills or hobbies into a side hustle is a great way to put extra money into your savings account. 

Set aside unexpected money

Sometimes when doing laundry, you may find a $10 bill that has gone through the wash. Instead of spending it, place this “new found” money in your vacation fund. It’s likely that you weren’t missing it before, so you probably won’t miss it in your wallet. Similarly, if you receive money as a gift or have a larger tax return than expected, you could put it in your vacation fund. This unexpected money can allow you to reach your goals faster. 

3. Scale back unnecessary expenses

Maybe you picked up an additional stream of income, and you still won’t make your goal. Or perhaps you don’t have the time to create more money. In those cases, you should control what you can control: scale back on unnecessary expenses and get rid of unwanted items. 

Cut back on food expenses

One of the easiest ways to find more money is to limit the amount of money you spend in each of your budget categories. Food is an important expense, but it is also one of the most adaptable categories. While some grocery costs are fixed, there are ways to save money while grocery shopping. For example, monitor weekly ads for sales and create a list before you step foot in the supermarket. You can also save money on food by limiting when you eat out and order delivery. 

Cancel non-essential subscriptions

There is nothing more dissatisfying than paying for a subscription service that you don’t use. A subscription service could include a video streaming service, a digital storage folder, or a magazine. These services won’t provide you with any benefit if you don’t use them regularly. Be sure to scan your credit card statements for recurring charges, and cancel any subscriptions you don’t use.

Sell unused items

Just like the subscriptions, if you’re not using an item, then you probably don’t need it. You could go through your closet, check under your bed, and scan the contents of your kitchen cabinets. If you haven’t touched a specific piece of clothing or mug in six or more months, then you probably don’t need it. After you’ve accumulated a pile of unnecessary items, you can post them on an online selling platform or consign the items to a local thrift store. Both options will give you a little bit of extra cash to put towards your vacation. 

Although there are many expenses that go into a vacation budget, you can lessen or eliminate the impact it has on your personal finances. Whether it be time spent planning, making additional income, or eliminating unnecessary items, do what you can to prepare well in advance. That way, you won’t have to worry about money on your trip. With a proper savings plan, you'll know how much money to save for vacation, and could be sitting in the sand or taking in the view from the top of the mountain in no time.