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How to save your vacation

Pick a destination – and start building your getaway fund now.Pick a destination – and start building your getaway fund now.


How to save for your vacation

If you're planning a vacation and you're like most people, you'll probably put your biggest costs, such as transportation and hotels, on a credit card. In 2014, 32 percent of Americans who took vacations did just that.1

It stands to reason: "Paying with plastic" is convenient and smart – but only if you've saved enough money to pay off the charges in full. With credit card interest rates currently averaging nearly 14 percent,2 carrying a balance on your account from month to month can push the total cost of even a modest getaway far higher than you ever imagined – and it can keep you paying for years.

By saving for your vacation beforehand, you'll reap a number of benefits:

  • No lingering debt. If you take a vacation in 2016, you won't still be paying for it in 2021.
  • Interest-free reward points. Charging your vacation to a credit card and then paying the balance as soon as the bill arrives allows you to rack up reward points and take advantage of other member benefits without having to pay interest on the balance.
  • Reduced stress. A vacation is more relaxing and enjoyable when you know that you've set aside the money to pay for it.
  • No regrets. With no outstanding bills to settle, you'll come home refreshed and energized – without regrets that you spent more than you can afford.

Getting there

Saving for a vacation should be like saving for any other major financial expenditure, such as a new car, a family celebration, or a down payment on a vacation home. It's a straightforward matter of setting a goal, establishing a time frame, and creating a plan.

Begin by deciding on a destination and itinerary and how you'd like to travel – luxury class, economy, or somewhere in between. By researching online, you can estimate the total amount you'll need to save. Make sure to factor in all the costs you're likely to incur, such as:

  • Transportation
  • Lodging
  • Passports and visas
  • Special equipment or clothing
  • Meals
  • Admissions to museums, concerts, historic sites, etc.
  • Souvenirs
  • Incidentals
  • Missed income if you're self-employed
  • Pet boarding if necessary

Coming up with a number

Next, decide how much you can comfortably set aside each month to reach your goal. For example, if you're hoping to get away this time next year and you've calculated the total price at $6,000, you'll need to put away $500 a month. If that feels like too much, you can reduce the amount and extend your saving horizon accordingly.

Open a vacation savings account

Setting up a dedicated savings account for your vacation will help you stay focused on what you're saving for – and deter you from tapping into your fund to cover unrelated expenses. It's also a good idea to formalize your account with an explicit name – e.g., "2016 Yellowstone Camping Trip Fund" or "Eat, Pray, Love Wine Country Tour: 2018." Then arrange for a fixed amount to be transferred into it each month from your checking account.

Make saving a family affair

If you're vacationing as a family, save for it as a family – and get everyone involved in researching, planning, and choosing activities. That will build excitement before the vacation and reduce the likelihood of disappointments and disagreements later on. Everyone will have a better time.

Make your vacation dollars go further

Saving on your vacation is as important as saving for your vacation. Whether you're traveling abroad or staying close to home, consider these tips for getting the most mileage from your money:

  • Take the long way around. You can often save money on your air ticket by choosing an indirect flight – say, New York City to Los Angeles with a stopover in Chicago or Denver. There are apps and websites that can help you find the most economical options.
  • Pay attention to timing. Airfares can vary widely depending on what time of year and even what day of the week you fly or book your seat. Specialized apps can help you determine when – and when not – to fly.
  • Sign up for free airline emails. Airlines offer special promotions, deals, and discounts from time to time – but you'll be notified of them only if you're on the airline's email list.
  • Make friends with the concierge. Once you've settled in at your hotel, check in with the concierge for inside tips on great restaurants, attractions, deals, and discounts that aren't covered in the guidebooks.
  • Travel with a group. Group trip organizers can usually negotiate significant discounts on transportation, lodging, meals, and other expenses.
  • Tip smart. Before traveling abroad, familiarize yourself with local tipping customs, which are likely to differ from U.S. practices. For example, in many countries, servers do not expect a tip, since a service charge is included in the bill.
  • But don't tip your hand. If you've been online for a while, checking out airfares and hotel rates, the prices may actually rise based on your interest. So make sure to delete all cookies on your computer before making a purchase – or compare prices on one device and book your arrangements on another.

Smart saving makes for happy campers

Spending your vacation worrying about how you're going to pay for it is no day at the beach. Start your vacation fund now, and take worry out of the picture.


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