How to Save for a Vacation



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I am a huge fan of traveling and highly recommend seeing the world if you can afford to do so. 

That said, here’s a disclaimer: going on vacation is expensive. It’s far too easy to splurge and send yourself into debt in the process.  

When you think about it, this completely defeats the purpose of going on vacation in the first place. When you have to work and save for several months just to pay for a trip, and then you come back with massive credit card bills, is it even worth it?

The good news is that with careful planning, you can cover all of your travel expenses in advance. Keep reading to learn how to save for a vacation so you can globetrot without going broke. 

How to plan a vacation budget 

1. Decide if a vacation makes sense 

Not everyone is going to want to read this, but the truth is that going on a vacation may not be the best idea right now. Before you start your road trip or summer vacation, make sure the following items are in order: 

Your debt is under control

Most people have a little bit of debt in some form or another. Make sure your debt is under control before going on vacation to avoid piling on even more in the process. 

This means not having any floating credit card balances or high-interest loans. Tacking on thousands of dollars in vacation spending is only going to make matters worse. 

Learn More:

You have an emergency savings fund

In addition to having minimal debt, it’s also a good idea to have at least six months of emergency fund savings in the bank.

Just imagine what would happen if you go on vacation and experience an unexpected medical emergency. Or, perhaps you miss your return flight and have to rebook a new one only to find flight prices are four times the original price.

These are common situations that can easily cost thousands, so you need to be ready to handle whatever life throws at you. 

You aren’t struggling financially

There is a big difference between taking some time off from work to recharge and going on an expensive vacation. 

If you’re struggling to put food on the table or pay rent, then going on vacation might not be a good idea. This is an area where it makes sense to put your needs in front of your wants. 

2. Break out the calendar

Once your next vacation is in the cards, break out the calendar and plan a date well in advance — ideally, six months to a year from now. 

This may seem like an absurd amount of time to make travel plans, but you’re going to need it if you really want to nail down the financial part of vacation savings. 

Planning ahead is going to get you better rates all around, including your flight prices, hotel room, and rental cars. It also gives you more time for saving money. 

When you have ample time to plan ahead, you’ll also be able to see what your travel costs are going to look like during the off-season versus during peak season. There’s often a significant difference. 

3. Determine your vacation budget 

Setting a trip budget can prevent you from overspending and can also help you achieve a particular savings goal to cover your vacation costs.

Start out with a total trip cost (e.g., $3,000) and then backfill your itemized expenses from there. 

Here are some of the basic vacation expenses you’ll have to account for:  

  • Food
  • Transportation
  • Hotel rooms or Airbnb
  • Entertainment
  • Shopping
  • Sightseeing 

How much you need to budget for largely depends on where you go, when you travel, and how long you stay. 

If you stay somewhat local and avoid flights and expensive hotels, you could realistically spend anywhere from $500 to $1,000. On the other hand, if you hop on a long-haul flight to Hawaii or Bali, you could easily spend $5,000 or more to travel. 

Start with your unavoidable costs, such as flights and accommodations, and go from there. It’s not uncommon to change your vacation destination based on what you can or cannot afford.

3. Pick a destination

Disney World may sound like fun, but the mouse can really take a big bite out of your wallet.

Be realistic about where you intend to go. If you want to save money, your family vacation itinerary should probably not include theme parks that charge hefty entrance fees (e.g., Disney World) and heavily trafficked tourist areas (e.g., New York City).

By thinking through these budgeting questions early, you’ll increase your chances of finding true happiness and relaxation on vacation because you’ll be traveling within your means.

4. Start saving money

To avoid going into debt to travel, you’re going to have to set aside money every month in a savings account before your trip.

Consider opening a separate bank account just for your vacation fund. Alternatively, many online banks offer savings envelopes, which let you disperse funds into a particular account bucket that you can designate for a specific purpose. 

Suppose your vacation is going to cost $5,000 all-in. You can save that amount in ten months at $500 per month, six months at $833 per month, or in three months at $1666 per month.

The main reason for using a dedicated savings account (or envelope) is to not use your vacation funds for daily expenses. 

5. Pick up a side hustle

Picking up a top side hustle is the best way to boost your savings and ability to take a vacation. For example, you can hop in your car and drive for Uber and Lyft, walk dogs, or take jobs on TaskRabbit to bring in a few hundred bucks or more each month.

Just think: the harder you work in advance, the more money you’ll have to cover your vacation costs. This also means less stress because you won’t have to worry about paying off your credit card bills when you get back from your dream vacation.

Learn More:

Money-saving travel tips 

Use credit card points 

Using a travel rewards card is an easy way to offset your vacation expenses. Not only can you earn extra points and cash back while paying for necessities on your trip, but you can also redeem points you’ve accumulated to pay for flights and hotel rooms up front.  

If you’re responsible at managing credit, travel rewards cards are the way to go. It’s that simple.

Make local connections

Once you reach your destination, keep an open mind. Don’t be afraid to strike up a conversation with a local and ask for a bit of guidance. If you do what the locals do, you’ll save money and have more fun. 

It’s also a good idea to check your own social network to see if you or any of your friends have any connections in your vacation destination.

Find the cheapest travel

If you have to fly, check out sites like Expedia, Kayak, and Skyscanner to find discount ticket prices. 

You should also consider traveling at odd hours to save money. Oftentimes, traveling on Sunday nights or taking a red-eye could get you airfare at a lower cost. 

Consider a staycation

You don’t have to go far to have a great time. Sometimes taking a staycation is the perfect way to relieve stress. You’ll save money, and be able to maximize shorter windows of time that would otherwise be spent in transit.

Frequently Asked Questions

Should you invest for a vacation?

The short answer is that this is a risky move. First and foremost, you’ll have to pay taxes on any capital gains you make in a brokerage fund, which will eat into your returns. On top of that, day trading is risky and difficult, even for professional investors. The market is volatile and you could lose money very easily.

Think of investing for long-term growth. If you treat the stock or crypto markets like a casino, you’re going to lose more than you win, wrecking your vacation travel plans in the process. 

There are many different ways to earn extra money for vacation. It largely depends on what you want to do, and how hard you want to work. 

Some examples include bartending or waiting tables, freelancing, managing social media, working as a virtual assistant, or renting your car out on a service like Turo

You may even want to rent out your house on Airbnb to bring in some extra cash when you’re traveling and not using your space.

How much does it cost to go on vacation?

According to recent estimates, the average cost of a vacation is around $1,200 per person, or around $4,800 for a family of four. 

On average, roughly 40 to 50 percent of that cost will be spent on airfare, with the remainder going towards accommodations, food, and entertainment.

The Bottom Line

Whether you’re taking a family vacation or a solo trip, vacations are expensive. Plan ahead, form a travel budget, and don’t overspend on things that you wouldn’t normally buy. If you do those things, your next trip will be more affordable and enjoyable. 

Bon voyage!





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