How to Save for a Vacation

For many of us, a summer vacation is a highlight of the year—a relaxing and restorative break from the bustle of daily life. But this annual rite of passage comes with costs, sometimes reasonably substantial. Hotels, rental cars, restaurant meals and other travel elements add up quickly.

Here are some simple ways to take the stress out of your planning and help you save for your next vacation.

To guarantee a fantastic summer getaway, it's crucial to start saving in advance. Budgeting for travel allows you to plan for the costs you’ll need to cover accurately and helps you think through strategies for saving throughout the months before your trip.

Follow the steps below to set up your successful process for saving for vacation.

Determine Where You'd Like to Go

The first step in the vacation-planning process is dreaming. Where do you want to go? Something is out there for everyone, from cultural capitals to beach resorts to historic sites. And there are always some ways — at a range of price points — to design the kind of vacation that will fit you and your family best.

For example, an American family who longs to see the cities of Europe may fly to Paris and Berlin. However, if such a trip isn't an option, they might visit Montréal and Québec City instead to save money while tasting continental charm. With all possibilities open to you, from local car camping to luxury getaways, you can create a relaxing and exciting vacation for $1,000 or $10,000.

Determine Your Vacation Cost

Once you’ve settled on your destination and the activities you’ll do there, determine the estimated total cost of your trip. You’ll have to account for many elements, including minor expenses that are easy to forget, like checked bag fees, tips and mementos.

Outline the likely costs for each element of your vacation in the following categories:

• Flights: Include any fees the airline may charge, like fees for checked bags or seat reservations.
• Ground transportation: Includes airport transfers, train and tram tickets, ride-share or taxi costs, rental car expenses and gas.
• Lodging: Include all aspects of lodging costs, such as cleaning fees for house rentals and resort fees at hotels.
• Food and dining: Include everything from breakfast and coffee to dining out, and remember that wine and cocktails can substantially boost this category’s cost.
• Entertainment and exploration: Include admission fees to museums and other sites, as well as the cost of any shows, excursions, activities and events you plan to attend.
• Shopping: Include any more significant purchases you plan to make and smaller items like souvenirs and local specialty items.
• Other costs: Include any other expenses you may have to pay, such as tips, laundry and other incidentals.

Reduce Costs with Off-Peak Travel

Consider seasonality when budgeting for travel, as this can significantly impact prices. For example, a beach vacation in the winter may be chilly but can result in huge savings if swimming is not on your agenda.

Did you know that Wednesdays and Thursdays are the cheapest international flight days? If you want to spend a week abroad, consider a Wednesday-to-Wednesday vacation instead of the typical Saturday-to-Saturday plan. Doing this is one of many great ways to save, cutting around 10-20% on airfare.

Accommodations can be just as expensive – or more – than airfare, so it pays to know when you can save the most money on hotel stays. While many factors impact a hotel rate, Tuesday is usually the best day to book a hotel internationally, with Monday holding the distinction for domestic travel.

Other Tips to Save on Travel

There are a variety of other tips for reducing the cost of your vacation.

• Choose an affordable destination with a reasonable exchange rate to make your money go further.
• Pick a place you can drive to, such as a national park, a beach town or a city you’ve never explored.
• Fly into a secondary airport farther from the city center, especially in European cities.
• Rent a house instead of booking a hotel, and stay outside the city center or in a less-touristy neighborhood.
• Cook your food instead of eating out for every meal — another way you can save by renting a house.
• Plan free or lower-cost activities like hiking, self-guided walking tours or beach relaxation.

Create a Vacation Budget

Once you have listed the elements of your trip’s cost and the ballpark price range for each, add them together to get the total expected price of your vacation. Pad that total cost with a reasonable buffer of 10% to 15% to account for higher-than-expected travel costs or currency fluctuations for international travel.

Once you have tallied up your expenses, you'll have a clear vacation budget to help shape your savings plan. If you're aiming to save up a significant amount for your trip, it might be necessary to take a more proactive approach to saving. On the other hand, if your vacation costs are on the lower end, integrating your savings goals into your monthly household budget should be a smooth process.

Calculate the required amount by determining how much you should save each month leading up to your trip. Then, strategize on how to consistently set aside this sum in a timely manner.

Review Your Household Budget

One way to find some extra money for your vacation is to examine your household budget and find ways to save wherever possible. You don’t need to be an expert in personal finance to tweak your budget in helpful ways that will allow you to grow a healthy vacation fund.

Check whether you can switch to lower insurance rates, cancel subscriptions or memberships, or cut energy costs by winterizing or turning down the thermostat. Minimize your food spending with savvy meal planning, buying generic instead of brand-name and packing your lunch more.

Each household will find different ways of tightening their household budget. But there is almost always some way of doing so, and sometimes you’ll find a large amount of savings this way.

As you consider saving within your weekly and monthly spending, consider creative ways to cut expenses. Also, look for extra ways to earn money. Then, put those savings in a dedicated savings account for your vacation.

Cut Expenses

There are many opportunities to save money in unexpected ways. Look to your mobile banking app, which likely includes money management tools that categorize spending and give you transparency into where your money is going. You may discover that you are spending unnecessarily large amounts on gifts, dry cleaning, coffee shops, dining out, media streaming, salon services or impulse purchases, among many other possibilities.

You can often cut expenses by changing your habits on fundamental things. For example, you can save on gas by taking public transportation more often or commuting by bike. You can reduce your water bills by taking shorter showers and turning off the tap while you brush your teeth. You can cut the cost of socializing by asking friends to do free activities or choosing cheaper restaurants for a night out. You can save in myriad small ways if you analyze the cost of all parts of your daily life.

Open a Vacation Savings Account

To keep your savings on track, open a savings account to store your vacation funds separately. This will let you see if your savings are on track to cover your coming vacation. Also, if you rely on your primary savings account to hold vacation funds, you may make the mistake of spending money you have earmarked for travel on other things.

If you already have a savings account, you can easily open another one with the same institution to serve as your vacation savings account. Also, look for accounts that help you save by rounding debit transactions up to the nearest dollar or automatically transferring $1 each time you use your debit card, such as Seacoast’s Sail into Savings account. These handy features can effortlessly build your balance in your vacation savings account. Some savings accounts may have a new customer bonus, but review the details to see if you meet the requirements.

If you have a long time to save for your vacation, consider putting the funds in a money market account or a certificate of deposit (CD). These options typically earn you higher interest than a savings account, but they have some limitations and restrictions. Transferring money to and from a money market account takes longer than from a savings account. To save in a CD, you must commit your money for a given time, such as 3, 7 or 11 months.

Earn Extra Money

There may be a couple of other ways you can boost your trip savings. One is earning extra in any way you can. The other is earning credit and debit card rewards that you can apply toward travel.

Earn Money on the Side

Think creatively about ways to earn extra money to add to your vacation savings account. Perhaps you have a hobby you can turn into a small business, such as sewing custom items or giving lessons in your favorite sport. Maybe you can work overtime, do odd jobs for neighbors, or hold a garage sale. If you have many high-quality items you can sell, turn to local consignment shops, craigslist, eBay or Poshmark.

Get Credit and Debit Card Rewards

Consider opening a credit card with travel rewards. With a certain amount of spending in a given time, you may be able to trigger large welcome offers that you can redeem for flights or hotels. Also, many hotel and airline-specific credit cards give you extra incentives, like room upgrades or free flights, for using points when booking with them. Using your credit card for daily expenses like food and gas can also help you acquire points quickly.

If you don’t prefer credit cards, explore debit card rewards programs that offer a range of deals that may apply to travel costs. With debit reward programs, you're only spending money you have, with the added potential benefits of discounts on a hotel, food or experiences.

Set Up Automated Savings

Once you have established your vacation savings account, set up automatic transfers into this account on a monthly or — better yet — weekly basis. The sum you contribute doesn't have to be substantial, but setting a target amount is essential to stay on track toward your goal. To determine your target, calculate how much money you need to save within a specific time frame and plan from there.

What is the 50-30-20 Rule?

One way to encourage your savings is to adhere to the 50-30-20 rule, which directs you to split your money in the following way: Put 50% to your daily needs, 30% to your wants and 20% to your savings. If you have a regular salary, you can calculate 20% of your earnings and have it transferred into your vacation savings account automatically each payday. Learn more about the 50-30-20 rule here.

Start Saving Now

Start saving for travel as soon as you know you’ll take a trip. The sooner you start, the easier it will be to reach your goal. Seacoast offers various options to help you save money for your vacation, including savings accounts, money market accounts and certificates of deposit.

Do you need help creating a personal savings plan? Your local banker can help you develop the right plan for your goals, whether for vacations, college or retirement. To learn more, fill out the form below.