Effective ways to save for your next vacation
Quick insights
- Setting up a savings account dedicated to vacations can help you plan and save for future trips.
- Common vacation expenses include transportation, lodging, dining and entertainment.
- Traveling to a destination during off peak season may cost less than visiting during the height of tourist season.
Vacations are a time often reserved for rest and relaxation. Knowing that your vacation— and all the costs that come with it—are already planned for can help add an extra layer of ease to your travels. But to get there, you may need to start planning and saving for your next vacation ahead of time.
Read on to learn how to begin planning and saving for your next trip.
The average cost of a vacation
Vacations can look very different. From a solo weekend camping trip to a two-week safari with your family, the price tag of a vacation can vary dramatically.
What impacts the cost of traveling?
Depending on the following factors, your trip can cost anywhere from hundreds to thousands of dollars:
- Duration: Are you staying a couple nights or more than a week?
- Destination: Are you staying somewhere local or are you flying to distant parts of the world?
- Travel style: Are you looking for a luxury stay with top-notch amenities or seeking a scaled-back, budget-friendly vacation?
Understanding these factors can help you estimate the price tag and how much you may need to save for your vacation.
Setting a vacation budget
When deciding how to much save for your vacation, it may be helpful to consider the type of vacation you want to take and what expenses you may need to plan for. Some common vacation expenses include:
- Accommodations and lodging
- Transportation, including airfare, car rentals and train rides
- Food and dining
- Entertainment and activities
Each of these expenses can influence how much you spend on a vacation, with lodging and airfare being two expenses that can fluctuate significantly. For example, an economy flight within the continental U.S. will likely cost less than a first-class, international flight. Similarly, staying a full week at a five-star luxury resort will likely cost more than staying a few nights at a budget hotel with a complimentary breakfast.
The time of year you travel can also affect the price of your vacation. Traveling to a destination during peak season may include paying more for flights and accommodations than you would if you went during off-peak times.
With these factors considered, you may be able to get an idea of how much your vacation could cost. Knowing this cost can help you set realistic expectations for how long it may take to save for this trip as well as when to trim expenses, if necessary.
Budgeting for your vacation
Some potential first steps for budgeting for your vacation might include estimating the cost of transportation, accommodation and entertainment, including ticketed events and planned excursions. Prior to your trip, you may want to research the following to help estimate costs:
- Flights: Many travel sites provide estimates for how much flights cost at any given time of year. These websites may also feature flight trackers that alert you of price change for desired flights.
- Accommodations: There are many types of places you can stay when you’re traveling. Researching hotels, resorts, short-term rentals or other options may help you understand lodging costs in the area.
- Excursions: If you plan to attend events or go on excursions during your trip, investigating those costs can help you create a more accurate budget.
It may be difficult to estimate meals and miscellaneous spending while on vacation. One way you may want to approach these less concrete costs is by having a daily per diem. This is an amount you set as your spending target (or daily spending allowance). The goal is to stay as close to that target amount as possible, and if you go over, adjust the next day’s spending to account for it.
This practice may provide some wiggle room while still staying within the confines of the budget you set.
Ways to save
A vacation budget can help you plan regardless of how big or small your vacation is, but there are other things you can do that may potentially help you save more on your trip.
Create a savings fund
Opening a vacation savings account, separate from your other accounts, may help you see how close or far you are from your savings goal. You may also be able to set up automatic savings transfers, ensuring that you route money toward your savings fund every month.
Consider off-season travel
Have your sights set on a particular destination? Traveling outside of peak times may be more affordable. Scheduling a vacation during a less popular time may also mean that there will be fewer crowds, shorter lines and more options to choose from when it comes to booking hotels, airfare and activities.
Use credit card rewards
Some credit cards offer rewards points that may be redeemed for travel. These points can generally be redeemed for flights, hotels, cruises, activities or rental cars. Depending on your card’s reward structure, you may be able to cover the cost of some of your travel expenses. Some cards allow you to use a combination of points and cash to pay.
Find ways to cut costs
If you're looking to vacation on a budget, you may be able to find more savings in the following ways:
- Taking public transportation when possible
- Finding coupons and discounts on events and admissions
- Purchasing groceries to save on dining out
- Using complimentary amenities, like hotel gyms or pools
- Redeeming credit card perks which sometimes include complimentary airport lounge access or rental car insurance
In summary
Planning for a vacation typically begins with budgeting and then saving. By calculating your anticipated expenses for travel, lodging, meals and entertainment, you can establish a target for your vacation savings.
Creating a specific savings account for your vacation funds can provide a clear view of your progress towards this goal. With this approach, you can enjoy your vacation, knowing that your expenses have already been accounted for.
