Guide on how to save money for a holiday
Travelling is not just a rich person’s hobby, and for middle-income earners, the activity involves a lot of money, and eventually stress once the difficulties of how to save serious money for travel set in. But there are simple, practical tricks to fatten up your savings for that dream travel.
In this guide, your will learn how to save money for vacation fast by applying smart strategies and, importantly, by boosting your self-restraint.
Create a budget plan
The first thing you need to do when saving for a holiday is to get a clear picture of your finances — that is, your monthly income, expenses and balance.
Creating a budget plan will help you understand how likely you are to reach a goal or if your dream holiday two months from now will remain a dream. It will also allow you to frame a more reasonable timeline or savings strategy.
Start by writing down your total income and creating a categorised list of all your expenses. The following expenses should be identified:
- Recurring necessity
This includes commodities or services that rarely fluctuate in price such as utility bills and groceries. - Recurring debt
This includes mortgage/loan payments, credit card payments (on instalment), interest payments. - Recurring expenses, irregular
This includes transportation fares, car maintenance, petrol and gym membership fees. - Negotiables
These are vices you can go without, like daily lattes from the corner coffee shop or Friday night binges with friends. - Unplanned
These are any other expenses that don’t fall under the categories above. These may also be recurring expenses that are not part of the budget, such as late payment fees.
Go over the list a couple of times to pin down every possible expense, and once everything is written down, pinpoint unnecessary expenses, flag them for removal and tighten your budget for the recurring ones. The latter may be done by monitoring and reducing consumption to lower the bills. Switching to a lower-cost provider is also a good alternative.
It’s also important to pay off debts sooner rather than later and avoid incurring new debt, especially while saving up for your holiday. Hide credit card(s) and transact only in cash to get a better sense of how much money you actually spend.
Turn budgeting into a habit because it will help you become smarter with your finances.
Set up your money funnels
Once the budget is in place, you can set up separate funnels for each expense category, and these may be actual containers or individual bank accounts.
One of the containers or accounts should be devoted to the holiday fund and the target amount for that fund should be clearly identified. For instance, “My $5,000 winter getaway”.
Giving the goal a name should rekindle your motivation even if the target amount seems too big at first. As the old saying goes, “Rome wasn’t built in a day”, so saving up for a big holiday wouldn’t be instantaneous either.
Research, research, research
With a target destination and budget identified, it’s time to trim pricey areas in your travel plans. That is, identify the parts that are unnecessarily expensive and search for better and cheaper alternatives.
Accommodation and airfare are the most expensive components of any trip, but they don’t have to be if your terms are flexible.
Staying in a hotel is obviously costly, so if you are content with simply having a comfortable lodging, you may opt for hostels, backpackers’ inns or share houses.
Check out budget traveller blogs for reviews so you will have an idea of where a limited budget brought others, how much they spent and the condition of amenities.
Saving on airfare is also possible by purchasing discounted fares or choosing smaller airlines. Direct flights are often more expensive than connecting flights, so if stops are fine and the transit times are acceptable, you may want to look at flights with transfers instead.
You also need to research on what you can do once you get to the destination. If the goal is to visit all tourist attractions, you can maximise the experience by going during the off-peak season, or on days or nights when you can get a free or discounted pass (such as in museums).
By doing a thorough research, you will get a better idea of how much you really need, and the budget you initially identified could even decrease. This means the amount you need to save for will also become smaller and you will be able to reach the goal faster.
Live on a self-imposed weekly or monthly budget
Think of the self-imposed budget as something similar to the pocket money when you were still in school. Begin with a total budget in your wallet at the start of the week and spend using only that money. Put whatever amount is left at the end of the week in your savings.
Start with a fresh budget for the following week.
Don’t give up
Saving money for travel requires tremendous self-restraint — forgoing on some luxuries, tightening up on necessities and even delaying little gratifications – to turn your dream holiday to reality. If it’s any proof, countless people around the world have travelled on a shoestring budget and you can definitely do the same with the right attitude and discipline.
Explore Nest Egg for more tips on Saving and budgeting.
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