Everyone dreams of laying on the beaches of the Maldives or 4x4ing through the jungles of Costa Rica. Whatever your travel dreams are, you can make them happen. These are 10 tips to help you save money for travel.
We know travel is not cheap. In fact right now, travel is rather expensive. But no matter what you want to do or how much you make, you can find ways to save money for travel.
Over a three year period, Nate and I were able to save over $100,000 to travel full time for a 2-3 year period. We are still traveling off those savings to this day and have learned a ton about the best ways to save money for travel.
We’ll cover how to save money for travel, travel savings account, travel saving, and more in this post!
This post is all about helping you learn how to save money for travel like a pro.
how to save money for travel
1. Track your spending
This is the single most important step in starting any plan to start saving money for travel. If you are able to accurately track what you are spending money on, you will naturally be more aware of what is worth it to you to spend money on. Often times when you start tracking your expenses, you realize that you are spending a huge sum of money on something you don’t really care about. Maybe it’s Target purchases, happy hours with co-workers, or one too many delivery food dinners.
Our favorite tool for tracking our expenses that we have used for the last 6 years is Mint.com. It’s a free service that connects to all your financial accounts (securely). It will automatically categorize all your transactions and show you trends. It’s not perfect so it’s best to review each of the transactions to ensure it’s being accurately tagged. This is also a great way to find out if there is any fraud on your accounts. We have found multiple cards that have transactions to companies we’ve never been to.
2. Create a budget
Once you hav a general idea as to how much you are spending each month in each category, it’s time to set up a budget. Budgets always sound so scary to me and honestly like a lot of work. So instead of ensuring I perfectly split the Target receipt so it goes to Personal Care, Home Decor, and Clothing, I created (okay, I probably didn’t create it but…) a much easier way to “budget.”
There are some things that are easy to separate. Your fixed expenses for one. These are the monthly subscriptions, bills, and payments you make monthly. It’s usually a set price like your Netflix account, rent, and a car payment. These can be budgeted for as it is usually the same every month.
If you are serious about saving (which everyone should be, even if it’s 5% a month), then next should be your savings. You should have a set amount that you set aside every single month and not touch.
Based on what your paycheck is monthly, you can easily find what money you have left over after paying all your fixed expenses. For example, say you make $4,000 per month and your fixed expenses come out to $1,500 per month and you save $500 per month. That means you have $2,000 per month remaining for all your remaining spending (groceries, gas, restaurants, shopping).
This is where my budgeting ends. I simply try to keep all my variable spending under that $2,000 budget and not bother with properly breaking it up into any further categories. But it also means you have to stay on top of your spending weekly if not daily.
3. Set a goal (and tell people!)
Now is the fun part. Set a savings goal and start saving. Maybe you want to save $5,000 to take that solo trip to Italy (Eat, Pray, Love style) or you want to save enough a trip by the end of the year. Whatever your goal, be sure to tell some of your friends or family about it. It will help make it more real and help keep you accountable.
If you aren’t sure what your goal should be, then budget out what your ideal trip would cost. Search for flights, hotels, and find out what an average meal costs. How much is transportation? You can find a ton of information online about what a trip can cost. And remember hostels are a great way to travel and meet people. And eating like a local is the best way to save money and learn about the culture!
4. cut on bigger expenses first
If you just can’t seem to make enough room in your budget for savings (or savings more), this is the best way to make a big impact. Now that you have started tracking your expenses, you can easily see what your three biggest categories are each month. Most likely they are housing (rent/mortgage, insurance, utilities), transportation (car payment, gas, maintenance), and food (groceries, restaurants, bars, fast food). Yours, of course, may be different.
If you are able to focus on reducing these three categories, then you will be able to save a far larger sum of money than if you focus on your lower categories (personal care, shopping, etc.). For example if you are able to save 10% on your housing category, that will go much further than if you save 10% on your shopping habit. Within each category, you’ll need to focus on the largest portion, like rent or your car payment. You could always ask for a lower rent payment or move to a less desirable neighborhood. You could sell your car and buy a used car in full. There are plenty of options. If you’re interested in more ways to save on your largest categories, leave a comment below and I’ll write some more articles!
5. make sacrifices - but stay happy
Saving money does require some sacrifices in your current spending habits. But it should never sacrifice your happiness. Saving money should not be some miserable process where you never leave your house or see friends because you want to save $50. In the grand scheme of things, those $50 won’t make that much of a difference in your savings, but not seeing your friends will make a BIG difference in your overall happiness.
The trick here is to cut spending on things that don’t matter to you. If you don’t care what car you drive, don’t get a nice expensive car. But if cars are really important to you, find a different way to save money for travel. While we were saving money aggressively before we started traveling, we found ways that made us happy and easily cut on things that did not matter to us. We lived in a less desirable neighborhood, didn’t go out for expensive date nights, purchased used cars with good gas mileage, and cooked most nights at home. But we did still spend money on travel and experiences. We lived in San Diego at the time and still decided to get a Disneyland Annual Pass. It’s a 2 hour drive and we had to stay in hotels a lot of the time but to us, that expense was so worth it. We had so much fun on those weekends at Disney. In the end we were much happier spending the money (and it wasn’t cheap) on Disney passes and everything that came with it than saving it for future fun.
Find what makes you happy and save on what doesn’t matter to you.
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6. cut on impulse spending
One way to ensure you are sticking to your budget, whatever that may look like, is cutting impulse spending. Let me tell you, marketing has gotten good. Like really good. I, too, want to grab that cute mug in the TJ Maxx line or my favorite chocolate bar at the grocery store. But if you are able to go to the grocery store with a list and stick to it, I promise you will start to save money. Same thing with Target. If you only need deodorant and floss, you only buy deodorant and floss. Even though it’s so tempting to find some new makeup item you don’t have and probably don’t need. By making a list and consciously sticking to it, you will be able to cut on a lot of unnecessary spending.
7. hide your money
This is one of my favorite tips to saving money because it’s a one and done type tip. You simply set it up and forget about it. That’s the beauty of it. If you are able to “hide” your savings from yourself, you are less likely to spend what you should have saved or dip into it.
Set up your direct deposit to automatically get split every paycheck. Have whatever pre-determined amount you would like to save go to a savings account at a different bank than your checking account. For example, send the $500 you want to save every paycheck to your American Express savings account and the remaining $3,500 to your Capital One checking account for your bills and monthly spending.
By having your paycheck split for you, you don’t have to remember to send your money to savings. And now it is hidden from you and you only have the remainder of your money to spend for the month.
Just talk to your HR (Human Resources) about how to split your direct deposit.
8. sell things you don't need
Another way to make some extra money that will help clear out some of the clutter in your house, is to sell it! We went through our home and found tons of stuff we had forgotten about. I personally find clutter distracting and stressful so being able to clean out our closets and cabinets so only the stuff we use and like remains was really refreshing. And we were able to make some money off of it.
The one secret to making more money off the stuff you sell, I will say is that you have to be okay to not sell it. If you are desperate to sell it, you will get far less than you should for the product. Sometimes it’s a very long and slow process to find the right buyer, but eventually it will come around. Before we even knew we were traveling we sold a ton of stuff and made over $3,000! This ranged from clothing to kitchen appliances, furniture, tech, and old dog gear.
9. buy generic
This is an easy tip to help you save some money. Buy generic brands. This is easier to do than ever with Target, Walmart, Amazon, and all grocery stores having their own generic brand. You can buy anything from body wash to soda as a generic brand. Granted not everything is as good as the original (i.e. Oreos) but often times, I wouldn’t be able to tell the difference. It never hurts to try out the generic and if there’s no difference to you, you might be able to save quite a bit of money!
10. Use a high yield savings account
Another automatic win is to use a high yield savings account. Did you know that the average interest rate on a savings account in the US is 0.1%? That’s $1 in interest for every $1,000 saved. That’s horrendously low. Not because you deserve free money, but because that bank is taking your money to use it for other investments or payments. You are essentially loaning them your money to use while you don’t need it. And they are only paying you $1 for every $1,000 they borrow.
With high yield savings accounts you can get a far better interest rate for your savings. Our favorites are the American Express High Yield Savings Account at 1.15% APY or the Synchrony Bank High Yield Savings at 1.40% APY. Granted these APY or Annual Percentage Yield can and do change quite often but they are unlikely to ever fall as low as a traditional savings account’s 0.1%.