When many people begin planning their vacation, many different ideas come to mind. Images of flights, exotic destinations, and five-star accommodations are often the first things would-be travelers plan for, almost with abandon as to how they pay for it. However, the first step to planning any trip is setting a budget prior to departure.
Setting a budget and travel savings goal does not have to require scrimping to save every single penny, or sacrificing the daily cup of coffee to take a vacation (although it wouldn’t hurt). Rather, by putting away a little bit prior to booking flights and before leaving for a trip, everyone can make sure their getaway doesn’t come at the sacrifice of their everyday expenses – or, even worse, incurring debt. Here are five easy ways everyone can save money towards their next vacation.
1. Create a SMART goal
Before deciding on a destination, buying accommodations, and deciding on attractions, the first step should always be deciding on a SMART goal. While most goals are smart in of themselves, a SMART goal allows would-be travelers the opportunity to make the most of their budget.
SMART is an acronym to describe five aspects of your financial goal. In order to be considered SMART, a goal should be: specific, measurable, achievable, results-oriented, and time-sensitive. Therefore, a vacation budget goal should determine how much travelers need to save, how long they have to save, and based on a very specific time frame – all while being realistic.
By creating a SMART goal, travelers can make sure they save enough money for their next getaway. Before buying any part of a trip, be smart by setting an achievable, time-based goal.
2. Pay yourself before paying others
With a budget and goal in mind, the next step is to begin putting cash away towards that next great vacation. In order to do so, it is important to pay yourself before paying anyone else.
Paying yourself does not mean physically cutting a check every month payable to yourself, or even getting a side gig to pay for the vacation. Rather, before paying any bills for the month, those planning for a vacation – or any long-term SMART savings goal – should get in the habit of paying their savings account first.
By paying yourself before paying others, travelers can make sure their savings accounts are getting added to, and extra money is not going towards bills or other frivolous tools. While it may take some discipline and dedication every month, paying yourself is the first step towards having a dream vacation to remember for a lifetime.
3. Automate your savings every month
In accordance to paying yourself every month, travelers should begin the habit of automating their savings every month. Much like auto-paying bills online, travelers who automate their savings every month can have an easy pathway towards watching their travel funds grow.
Many banks allow travelers to set up a recurring monthly deposit to a savings account, in order to ensure money is coming in on a weekly basis. For those few banks that do not allow recurring monthly savings deposits online, travelers have additional options available to them. From signing up for a no-fee checking account and automating transfers between accounts, to using a round-up account linked to a debit or credit card, saving money towards vacations can be a simple process.
Through automatic deposits to dedicated savings accounts, travelers can get closer every day to their dream vacation. All it takes is dedication to a monthly budget, and a little creativity to keep money saved towards the next trip.
4. Explore credit card rewards
In addition to automated savings processes, many travelers are earning rewards towards their next trip with every stop at the grocery store or gas pump without even knowing it. Many credit cards and some debit cards offer valuable rewards programs that can help travelers save money when booking their flights or hotels.
While some credit cards offer points or miles towards one hotel chain or airline, other credit cards offer flexible points that can be redeemed across brands. Flexible points, like those earned on the Chase Sapphire Preferred, can either be redeemed directly through the rewards program for travel on any carrier, or be transferred to other programs for redemption with favored airlines or hotel chains.
By understanding the rewards available on credit cards, travelers can augment their regular savings to even greater gains. Through maximizing every opportunity, the money budgeted and saved can get stretched even further.
5. Be flexible in your savings process
Finally, while setting a “SMART” goal, automating savings, and maximizing credit card rewards programs can all be excellent ways to save towards the next vacation, life doesn’t necessarily work around our best plans. When unexpected turns happen, it may be time to reconsider our travel plans.
Unfortunately, car repairs and unexpected illnesses can force travelers to make difficult decisions about whether or not to take a trip. If a life situation happens prior to booking a trip, it may be prudent to dip into the travel savings before making budget sacrifices or going into debt. In these situations, travelers can always delay their next trip – or adjust their travel plans – based on their new budget and timeline, without creating a major strain on their finances.
If a trip is already booked, this is where travel insurance benefits can come in to help a traveler. Under certain qualifying situations, including the death or serious illness of an immediate family member, travelers can qualify for reimbursement of non-refundable travel costs in the event of an emergency. Furthermore, those who paid with a credit card may already have travel insurance benefits, without even knowing it. When it comes time to book a trip, be sure to understand what benefits you may have available. If your payment method does not come with travel insurance, it may be prudent to add the cost of a third-party plan to the overall budget.
While saving towards a vacation may seem like a daunting task, financially preparing for a trip can be a simple and calculated experience. Through careful planning, budget management, and setting “SMART” financial goals, every traveler can get closer to their next big getaway without breaking the bank.