Do you want to go on vacation but you’re not sure where to find the funds? In this step-by-step guide on how to start saving for vacation, we’ll go over the steps to help you save money for your next trip!
Why Saving is Important
We all know vacations are expensive. Whether you’re planning a road trip, a staycation, a cruise, or a Disney adventure, they all are going to cost more than your typical day-to-day expenses.
Planning ahead and saving a little at a time can really help when it comes to making that down payment for your vacation and even the full payment.
Step 1: Set Your Vacation Goal
The first step in saving for vacation is to figure out what your vacation savings goal is for your next vacation.
- What’s your travel destination?
- How many people are going?
- What do you plan on doing there?
- Events, activities, all-day passes, etc.
- Do you plan on making your own food or going out to eat?
- Where will you stay and how much does that cost? Hotel rooms? Camping?
- How will you get there? Road trip, airplane, etc?
- How much are transportation costs including the cost of airfare, public transportation, car rental, and fuel.
Jot these things down and you’ll start to get an idea of how much money you’ll need to save for your next vacation.
Money Saving Tips
- Consider finding a place to stay where you can prepare your own meals so you don’t have to eat out for every meal which can add up.
- Consider walking for the most part instead of renting a vehicle, if able. Or, do what we did on our honeymoon, and just rent a vehicle for a couple of days for the things you want to do that are far away, otherwise plan on things that are close enough to walk for the days you don’t have a vehicle.
Step 2: Set a Realistic Deadline
When do you want to go on this trip?
- In 6 months? 12 months? 5 years? Knowing your travel dates is a good place to start.
- How long do you have to save up for this trip based on the deadline you have?
- Before you even calculate how much to save, do you think you can save a lot of money in this amount of time?
Step 3: Calculate How Much to Save Per Month
Once you know your estimated number from Step 1 you can take the deadline from step 2 and figure out how much you’ll need to save each month moving forward.
For example, if you are going on a vacation a year from now that costs about $3,000 then you would take $3,000 divided by 12, which equals $250. So you’d need to put $250 a month in a vacation fund (i.e. separate savings account just for this trip).
Ask Yourself
- Is the number you came up with reasonable?
- Can you put that much money aside each month and still live comfortably?
- If not, what can you cut from the trip to make it doable?
- Or can you push the trip out longer so you have more time to save?
Step 4: Where to Save the Money
As I mentioned in the previous step, setting up a separate savings account just for vacation costs is really helpful. We have separate savings accounts for vacations, one for car insurance and tabs, one for gifts, and so on. For many banks, it’s easy to create a new savings account with a custom name right in your banking app!
Having a dedicated vacation savings account helps you know exactly how much you have saved for your trip and ensures you won’t accidentally spend that money on anything else.
It also makes it easy for you to add more money to the account on months that you may have more left over at the end of month and then you can always put in less the following month, if that’s what you need to do.
If you prefer, you could use a vacation savings envelope or vacation fund jar, but I find those hard to work with since most things will need to be paid ahead of time digitally instead of with cash. It’s up to you though.
Step 5: Automate Your Savings
If you’ve opened a dedicated vacation savings account as suggested in the last step, now you can easily set up automatic transfers throughout the month or at the end of the month.
This way, you don’t even have to think about it, it just happens.
Before you do this though, ensure you have the funds in your general checking account to cover this automatic withdrawal. You don’t want the situation where you end up with overdraft fees because you’re saving for vacation.
Also, be sure when you’re setting this up that you are either able to set an end date for your vacation fund OR set a reminder for yourself to manually end the automatic transfers when you’re done saving/have taken your vacation.
Unless of course, you want to keep putting aside the same amount for your next vacation!
Step 6: Cut Expenses and/or Add Income
If you’re finding that you just don’t have enough money to go on this trip, start seeing where you can cut expenses, at least for the time being. It’s amazing how small changes can free up extra cash!
These things could include:
- Meal Planning – see my blog post all about this here
- Pause going out to eat
- Make coffee at home instead of buying it at a coffee shop
- Trim down your streaming services to just the one you use the most
- Cut out unused subscriptions
- Use cash back apps such as Rakuten
If cutting daily expenses seems out of reach, consider adding extra income for the time being:
- Survey Sites such as Pinecone Research
- Get cash by selling things you or your kids no longer use around the house
- Side hustle such as: babysitting, dog walking, or selling crafts.
- Company side hustle such as driving for Uber, working for Shipt, etc.
- Using Credit Card rewards/miles BUT be careful about opening a new card, I don’t recommend doing that.
Step 7: Track Progress & Stay Motivated
The best way to stay motivated is to track your progress and savings goals! You can do this with either the app that you’re saving money in or printing out this visual tracker that is part of my 57-Page Financial Planner printable. You can get this page for free when you sign up for our weekly newsletter below!
​Having a visual representation like this on the fridge or other central place of the house helps you stick to it! Having clear goals,
Your Turn!
Now that you know the steps, it’s your turn to work on your vacation budget and start saving for your dream trip!
Some other things to be aware of is you may want to use a debit card that offers travel insurance or buy it on your own. If you do use a credit card for anything, ensure that you pay it off IN FULL before it’s due so you don’t have to pay extra money in high interest rates.
FAQ
Should I use a credit card for vacation?
ONLY if you will pay it off completely every month so you don’t end up needing to pay interest.
Is it better to save weekly or monthly?
It depends on how your budget typically works and when you have the money to do so. We tend to save monthly but for some families saving weekly or with each paycheck, often biweekly, may work out better. Do what works for you.
Throughout my parenting journey with 3 kids on a single income, I have become an expert in living comfortably within our means without feeling restricted and I will help you do the same.
I'm a former school psychologist who left my career to stay home with my children, hence the one-income family and needing to adapt to that mentality while still living comfortably.