Learn how to save for a vacation

There are a few key things to keep in mind when saving for a trip. Start by setting broad goals (such as your destination, accommodation and activities) and estimate how much each will cost. 

Determine your travel costs

Whether or not you already know your holiday budget, start by listing a few items and their approximate prices, including:

∑      travel costs (air fare, train tickets, cruises, taxis, etc.);

∑      hotel costs, including resort fees;

∑      food costs;

∑      travel insurance, and

∑      activities, including hotel services, daytrips, adventure tours, and admission fees, etc.

Once you have this list, determine the total cost of your trip adding in a daily "slush fund" for spontaneous purchases. If it's within your travel budget, then great! But if it's too expensive, you'll either have to remove things from your list until everything fits, or make choices.

Here are some suggestions for cutting costs:

∑      Fly economy instead of business.

∑      Change your travel dates, as mid-week can be cheaper.

∑      Get a private room in a hostel instead of a hotel.

∑      Find a hotel further from the city's centre, but near commuter options.

∑      Find similar (but cheaper) activities, or research different companies offering the same thing.

∑      Find Groupons for your activities.

Create a budget for your trip

Next, create a savings budget for your trip. Determine how much money you have coming in each month and what your regular expenses are. Any money left over is what you can save to put towards your trip. Remember to leave room in your budget for unexpected expenses. This will help ensure that you donít overspend and end up putting your trip at risk.

Once you know how much you can put aside for your vacation, divide the total cost of your trip by the number of months until you travel. This will give you an idea of how much money you need to save each month to make your trip happen.

On the other hand, if you don't yet have a travel date set, this will give you an idea of how long it'll take until you can afford to go.

It goes without saying that if the numbers don't work out (that is, you have to save more each month than you are making) you will need to adjust your trip to reduce its cost. Some people like to cut costs by using coupons or discounts when they book their travel. This can be a great way to save money, but make sure you do your research to make sure you are getting the best deal.

Save for your vacation

One way to save for your vacation is to use a travel credit card to earn points or miles that can be used towards your trip.

You could also consider using a savings account or investment account specifically for your trip. This can help you stay on track with your savings goals and make it easier to see how much progress youíre making. Plus, it can give you peace of mind knowing that your trip savings are separate from your everyday finances.

Saving for a trip can seem daunting, but if you take the time to plan and budget carefully, it is definitely achievable! By following these tips, youíll be on your way to an unforgettable vacation before you know it.

Finally, check out our investment returns calculator to see how your savings could grow using different investment vehicles!

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