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How to Save for a Vacation While Sticking to Your Budget

Jul 26, 2018 3 min read Susan Johnston Taylor

Key Takeaways

  • Put savings on autopilot and watch your travel fund grow.
  • Earn extra cash and earmark it for travel.
  • Cash in credit card points or miles to lower your out-of-pocket costs.


If saving money for travel seems daunting, don't fret — we're here for you. Whether you're pining for a relaxed beach oasis, a culture-filled city excursion or anything in between, we've compiled budgeting tips to help you make that vacation a reality — without going into debt.



Here's how to travel on a budget.

Automate savings

Tally up travel expenses including transportation, food and accommodations to estimate how much you need for the vacation you want. Once you know how much you plan to spend, take that number and divide it by the number of months until your departure. (You'll need some money upfront for flights or perhaps a deposit on a beach rental, but other expenses like food or excursions typically don't occur until you're actually on vacation, unless you are paying for a package tour.)

Say you're planning on a trip six months from now that will cost $1,000. $1,000 divided by six months is $166.66, but we'll round up to $170 to cover a few unanticipated expenses. That means you'd need to put away $170 every month between now and the trip. To ensure you reach your goal and to avoid spending that money in other ways, set up automatic monthly transfers from a checking account to a savings account earmarked for travel.

Monitor your budget

Review your spending over the past several months and separate expenses into two categories: wants and needs. You, of course, "need" to buy groceries and pay rent or a mortgage, but new electronics and fancy clothes fall into the "wants" category. As you're creating a budget , try to reduce your spending on wants and instead reallocate that money to your vacation savings fund.

Forgoing certain material wants for a more experiential want (that much-anticipated trip) can lead to greater happiness in the long run, according to social science. Anticipating vacation is part of the fun!


Negotiate your bills

Maybe you've already given up cable TV and music streaming services, so you don't have many expenses left in the “wants" category. You can often negotiate necessary expenses such as car insurance, home internet or your cellphone bill. A few minutes on the phone with your service provider asking about any special rates or lower priced plans could save you hundreds of dollars over the course of the year — dollars that could go toward that dream getaway.

Bring in extra income

Tightening the purse strings only goes so far, especially if you're already frugal. However, bringing in some extra cash can help make your dream vacation more attainable. Maybe you can work a little overtime or put a bonus toward your vacation fund. Perhaps you can devote a few hours a week to babysitting, dog walking or tutoring for extra money.

If you don't have the time for side hustles, consider selling any unused clothing, furniture or electronics you may have lying around. You might have a yard sale or use Facebook marketplace. You can also sell items online through eBay, Poshmark or similar apps. A few hours of sorting and selling in the evening or weekends could help beef up your vacation fund without a major time investment.

Cash in those points or miles

If you've been steadily earning points or miles on a rewards credit card, now could be the time to cash them in for a vacation. The more flexible you can be about date and destination, the more likely you are to find a good value for your travel rewards.

However, if you're using rewards credit cards to earn travel, make sure you're paying off the balance in full each month. The amount you pay in interest on a rewards card is likely to wipe out any savings you might get from travel rewards, so this strategy only makes sense if you're not carrying a balance.


What you can do next

Make use of travel budget calculators, such as these from PALPrices Opens in a new window and Free Online Calculator Use Opens in a new window. Then print out a photo of your intended travel destination and keep it in your wallet or on your fridge. The next time you reach for your credit card or consider calling for takeout, you'll have a gentle reminder that you can set aside the cash for that big trip instead.


Susan Johnston Taylor has written about personal finance and business for The Atlantic, The Boston Globe, Fast Company and U.S. News & World Report.


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