Figuring out the best way to pay for vacation doesn’t have to involve depriving yourself of fun in the months leading up to your trip. Instead, make strategic decisions that help you save money on your trip and work with the budget you have while still maintaining your lifestyle. With a little foresight and planning, you’ll fund your dream vacation in no time by following these six tips.
1. Choose the best location for your budget
As you start to think about your travel destination, pick a place that makes sense for your budget. When you start looking into how to pay for a Disney vacation, for instance, you may be surprised at how quickly the expenses add up — especially if you’re not within driving distance of California or Florida. The same holds true if you’re hoping to spend ten days at a Phuket resort in Thailand. Unless you’re willing to shell out thousands of dollars (without going into debt), you may want to adjust your vacation location to a more realistic financial target. Think about how much you can realistically save in the months leading up to your trip, then choose a vacation that’s in budget with your goal.
2. Create a vacation fund
Wondering how to start a vacation fund? The best way is to open an entirely separate account for this money. Alternatively, you could also create a savings bucket in your favorite budgeting app if you’re already using one. The idea is to keep the money separate from your other savings so you don’t accidentally dip into your vacation fund for other things.
With a separate vacation fund, you’ll feel increasingly motivated as you inch closer to reaching your financial goal. Plus, you can easily map out how much you need to save each month to reach your goal and whether or not you’re on track. You then know how to adjust your spending or saving to correct your course.
3. Open a high yield savings account
As you save up to fund your vacation, maximize that money by keeping it in a high yield savings account. It’s better than sitting in a checking or basic savings account because your balance will earn interest. And while rates aren’t incredibly high these days, you’ll still end up with more cash than you deposited.
Another tactic is to find an account with a sign up bonus. You may score a free $100 or more just for opening an account at a new bank. You may need to meet a minimum deposit threshold or sign up for direct deposit in order to qualify, but it’s worth exploring current deals to find the best one.
4. Make your travel reservations early
Once you have your vacation savings plan underway, it’s time to start booking your travel arrangements. Start early so you can compare prices and take advantage of major savings. You’ll pay more for hotels and airline tickets the closer you are to your travel date. Make reservations between one and four months in advance to save the most. You could also spend less money by paying for your hotel room in advance. By simply planning ahead with your reservations, you can avoid having to pinch pennies to afford your trip. Instead, you’ll simply spend less while enjoying the same (or better) vacation you already planned.
5. Use travel credit cards (responsibly)
Saving up for your vacation fund is much better than charging the trip on your credit cards and paying it off over time. Credit cards typically come with high interest rates, causing you to spend much more on your trip. But using travel credit cards and paying off the balance in full right away can open the door to some better perks you don’t have to save up for — leaving you more money in your vacation fund.
First, you may qualify for a sign up bonus when opening a new travel credit card, as long as you meet certain spending requirements in the first few months. The bonus is often enough to cover the cost of a flight — taking one major expense off your savings list without having to give up a single latte. You’ll also earn points on travel expenses, which can be used towards future trips, and often with a higher points value than using it for cash. Finally, travel credit cards usually come with perks like trip cancellation insurance, no foreign transaction fees, and more.
6. Make money by renting out your car
The last strategy on funding your vacation without penny pinching is to learn how to make money on vacation. A completely headache-free way to do this is to use Avail car sharing. You simply leave your car at one of our neighborhood locations when you leave for your own trip, then get paid for someone else to rent it while you’re gone. Avail cleans your car before you get back home and your vehicle is protected with insurance from Allstate. You don’t have to pay for airport parking (saving you as much as $75 per day), and you’ll make money each day your car is reserved. Depending on your vehicle, you could earn anywhere between $20 and $25 per day of your vacation, all without doing anything differently than you originally planned.
Taking a vacation doesn’t mean you have to abstain from spending money before your departure. Instead, get smart with saving, making reservations, and earning money while you’re gone.
Sign up to share your car with Avail today to help you fund your dream vacation.