As travel gets more expensive, it can be tough to justify taking a leisure vacation—especially if it cuts into your savings budget. But you may not have to choose between the two. With some work and prioritizing, you can save money and see the world at the same time. Here's how.
1. Set a Budget
Setting a budget gives you control of your everyday spending. Budgeting gives you more awareness of your living expenses, and helps you determine how much you have left for discretionary spending and savings. Your budget is a useful tool for splitting money among your savings goals, such as travel, holiday shopping and a down payment.
Once you've set a monthly budget, take the pressure out of saving by making it automatic. Diverting money from your checking account to a high-yield savings account every payday using your bank's app is an easy way to build savings. Using a sinking fund earmarked for a trip can make you less tempted to book travel you can't afford on a credit card.
Find High-Yield Savings Accounts
You can optimize your travel savings by creating a trip budget. Estimate the costs of transportation and accommodations. Then, determine how much you'll spend on daily meals, activities and entertainment, and souvenirs. Consider including a little extra for unexpected expenses.
If you're traveling internationally, don't forget to consider the exchange rate and currency conversion fees. Adjust your budget based on the funds you have available, and track your spending throughout the trip to stay on track.
2. Get a Travel Rewards Card
A travel rewards card lets you earn rewards that you can then use to travel for less. Each of your purchases earns miles or points that you can redeem for flights, hotel stays, upgrades and more.
Many travel rewards cards offer a welcome bonus for new cardholders. The bonus provides a sizable amount of rewards when you meet a minimum spending requirement within the first few months of opening your account. Some welcome bonuses are high enough to cover a flight or hotel stay. Start early if you're planning to use a welcome bonus to offset costs of an upcoming trip: It may take several weeks or months for the bonus to be credited to your account.
Travel rewards credit cards offer a slew of other money-saving perks. Some waive foreign transaction fees on purchases when you're traveling internationally. Depending on the card, you might even have access to other travel card protections and money-saving benefits like waived baggage fees, trip cancellation coverage, access to airport lounges, complimentary companion tickets and expedited security fee reimbursement. These perks reduce your travel costs, allowing you to maintain your regular savings while you travel.
If you use a travel rewards credit card, it's important to avoid carrying a balance from month to month. Paying interest on a travel card offsets the savings offered by your rewards and perks. Instead, charge only what you've budgeted for each month and pay your balance in full to avoid monthly finance charges.
3. Cut Back Where You Can
Cutting back on everyday spending is another way to save money as you continue traveling. Optimize spending on streaming services and other monthly bills by either lowering your subscription or canceling the services you don't use. With a service like Experian BillFixer™, you can automate bill negotiation to help you save.
Space out salon visits, or do more of your beauty maintenance at home. Cook more meals at home and order less takeout. If you can't pinpoint where you can cut back, try monitoring your spending for a month and watch for nonessential spending.
4. Look for Travel Savings
You can save money by cutting back on travel costs too. When you're traveling, prioritize the things you really want instead of splurging on every trip expense. For instance, consider cutting your food budget to afford nicer accommodations (or the other way around depending on your preferences). Here are some other ideas for cutting back on travel spending:
- Book your flight a few months in advance for the best prices
- Prepay your hotel for discounted rates
- Look for free concerts and other activities
- Opt to drive instead of fly
- Travel during off-season
- Take photos for memories instead of purchasing souvenirs
The Bottom Line
You don't have to sacrifice your wanderlust to reach your savings goals or vice versa. With planning, creativity and flexibility, you can continue exploring the world and contribute to your savings at the same time. Stash your savings in an account that will give you a nice return to build your savings faster.