You’ve worked hard and as a reward you want to take a trip or two this year, but you don’t want to deal with any post-vacation debt (Smart). Don’t end up like so many other travellers who are still paying for trips they have taken years ago.
Surveys show that about 48 percent of Canadians are making cuts in their budget in order to afford a trip.
You want to save money for travel, and the trick to saving is establishing a vacation goal and savings plan. What’s the best way to save money for vacation? There are a lot of ways you can start saving for vacation. The “best” one is the one you can most easily stick to—though you can use several strategies at once to help increase the amount of money you can set aside for your next vacation.
How to Take a Vacation without Going into Debt
A vacation is a goal. It gives you something specific to plan and save for—an incentive, a purpose. And taking a vacation is important. It helps reduce stress, gives you a mental break from your everyday obligations, and it allows you to spend quality time with family, friends, and potentially meet new friends along the way.
So, here are some tips on how to save for a vacation and achieve your financial goals.
1. Do Your Homework and Research All of Your Vacation Costs
Before you set a savings goal for your vacation, it can help to evaluate what your costs should be for your trip. Determine the kind of vacation you want and what it will cost you. It’s important to be realistic when it comes to how much you can afford to spend on your vacation.
If you set an unrealistic savings goal, you’ll be disappointed when you can’t achieve it. You want to be successful. It’s important to be realistic when figuring out how much money you’ll need to set aside for your vacation budget.
Some things to include in your vacation budget are:
- Travel Expenses. Including tips, cab rides, vehicle rentals, bus fares, exchange rates, airfare, etc. Try to establish how much you can expect to spend on travelling to your destination and getting around the area once you’re there.
- Accommodation Expenses. Research rates for hotels, motels, or AirBnBs in the area you’re going, for the time of year you’re going on vacation. Try to arrange these accommodations and lock in your rates ahead of time to avoid surprise cost increases.
- Food Costs. How much does eating out cost in the area you’re travelling? Does your hotel include meals in their bill or charge separately for breakfast, lunch, or dinner?
- Entertainment Costs. Odds are that, if you’re going on vacation, you probably have a specific bit of entertainment in mind, such as a concert, theme park, convention, etc. How much does attending the event cost? You should set aside enough money to handle purchasing your ticket (if necessary)—though you might also be able to prepurchase a ticket before you leave. If you’re prepurchasing event tickets, check if those tickets are refundable or transferable to others in case you aren’t able to go on vacation when you planned. That way, you can recover your money if an emergency arises.
This will make it easier to establish your vacation savings plan and achieve your vacation goal. You may want to put aside some extra cash above your minimum savings goal to cover unexpected expenses as well.
2. Write Down Your Vacation Financial Goal to Determine Your Savings Schedule
Putting your vacation savings down in writing makes it more real. Start by writing down the total amount of money you’ll need and the date you will need it by, then work backwards. Figure out how much money you’ll need to save every week between now and that date to achieve your vacation goal.
Download our free Money Management & Budgeting booklet. Inside is our Financial Goals Worksheet which you can use to set up and organize your financial goals easily.
3. Add Your Vacation Fund to Your Monthly Budget
Once you’ve established your vacation fund it’s important you add it to your Monthly Budget. Don’t have a monthly budget? No worries! Download our free Budget Planner and you can manage all of your monthly expenses and see exactly how much of your disposable income is going towards different expenses. The best part is that you can make adjustments to your budget, cut costs and increase savings once you know where your money is going.
4. Open a Separate Savings Account and Watch the Balance Grow
If putting money aside for saving is challenging for you, set up an account and DON’T attach it to your debit card. This way you’re not tempted to use your travel funds when you’re out shopping. When my friend was younger and wanted to save for a specific item, she opened a joint account with her parents and set it up so that a withdrawal required both of their signatures. She told them not to sign a withdrawal request unless it was for her goal item – her wedding dress. She regularly (sometimes begrudgingly) put funds into this account and didn’t make a withdrawal until she paid for her wedding dress.
5. Set up an Automatic Deposit for Your Vacation Savings
You can also arrange for an automatic deposit to go into your travel account every payday. Most people don’t miss the funds if they don’t see the money in their account in the first place.
For example, some banks offer a rounding feature that allows you to round purchases up to the next dollar and puts the difference in a savings account automatically. Automatic savings tools like these can make saving for your financial goals much easier.
6. Tell Somebody about Your Vacation Goals
It’s helpful to tell someone about your vacation goal to make you more accountable. We all want to be successful, especially in front of others, and that person can encourage you to keep going when you may be tempted to give up.
7. Start a Travel Savings Jar to Avoid Debt
Another way you can help yourself save money for your next vacation is by throwing your change into a jar at the end of the day. These funds can then be transferred to your vacation savings account. This probably won’t be a lot of money, but you could surprise yourself with how much a change jar can accumulate over the course of a year.
8. Track the Money Gobblers in Your Life
How much are you spending on your daily habits like eating out, smoking, or other small but repetitive expenses? Do you withdraw funds from another bank’s ATM and get hit with extra transaction fees? Just one of those withdrawals could cost you up to $9 per transaction. Look at the various ways your money is being gobbled up dollar by dollar.
If you notice that you’re spending a lot of money on things you don’t need, consider cutting back on those costs and putting that money toward your vacation fund instead. For example, you could try to quit smoking—which would not only help you save money (anywhere from $11.68 to $15.92 per 20 pack depending on the brand and where you buy them in Canada), it could help you improve your health.
Our free Monthly Spending Tracker can help you identify those small expenses gobbling up your trip fund.
9. Find a Second Job, or Look for a Side Gig or Side Hustle
Joining the gig economy can be a great way to earn some extra cash to set aside for your next vacation. Using your downtime to deliver groceries, do odd jobs, or engage in ride-sharing can be useful for building up spare funds for almost any financial goal.
Which of these methods of saving for your next vacation is the best? Whichever one helps you set aside the most money in the most consistent manner. These tips aren’t mutually exclusive, either. Do them in conjunction to help maximize your vacation savings and avoid having to rely on your credit card to make it through your trip.
Non-Profit Credit Counselling Can Help You Achieve Your Vacation Goals
Following just a few simple tips for saving money can help you ensure that you have enough to fund your dream vacation. Start now and I wish you “bon voyage” when you’ve achieved your vacation goal without going into post-vacation debt.
If you need help putting together a budget or if you are dealing with debt that makes it impossible for you to save for your other financial goals, please give us a call at 1.800.267.2272.
Credit Canada offers free, one-on-one counselling sessions with certified Credit Counsellors who can go through your monthly expenses with you, as well as any debt you have, and provide you with all of your options for achieving your financial goals whatever they may be, whether it's becoming debt-free, saving for a vacation, or both!
Vacation Savings Resources:
- How to Take A Summer Vacation Without Breaking the Bank
- Is it OK to Go Into Debt for a Vacation?
- 10 Tips for Affordable Travel
- Free Budget Planner
