How To Save For Longterm Travel
Travel is not cheap. Period. Even flying on the cheapest airlines, staying in the cheapest accommodations, and doing all the cheap activities you can find will add up to a considerable amount. So how can you go on your dream trip without moving back in with your parents? Research, Prioritize and Execute.
Decide on a travel goal.
Narrow down all your travel desires and destination ideas into one specific trip. This doesn’t mean that you have to choose only one destination but you will need to transform your dreams into an attainable goal. You might have to spend a few days or weeks scanning through your stacks of dog-eared Lonely Planet books and your 75 bucket list pinterest boards to reach a decision.
By deciding on a specific travel goal you can effectively budget for your trip and create a realistic savings plan.
Create your preliminary travel budget
Once you have decided on your travel goal, you will need to calculate all of your trip expenses. Do not overlook the small costs, they can quickly add up and are just as important as that pricey airplane ticket. Work out all your expenses so that you can have an accurate number on which to base your savings plan. Be sure to include item such as visas, immunizations, travel insurance, local transportation, and any personal medication.
- There are useful services such as kayak.com/explore, where you can view flights on a map based on your budget. You can then use skyscanner.com and google.com/flights to further compare and narrow down your flight options.
- Use a travel budget calculator and country daily cost calculator to help create an accurate estimate of how much you will be spending on food, lodging, transportation, and entertainment.
- If you are going to be renting or purchasing a vehicle, be sure to include the cost of fuel and insurance.
Once you have created a detailed budget for the extent of your trip, add up all the projected expenses. This is your savings goal.
Create Your Savings Plan
Pay off Your Debt!!!
I know. It sucks. Making sure you are debt free before any extended travel is the best way to reduce stress and ensure that you are maximizing your potential for putting money aside for travel. There are many free tools out there to help create payment schedules to pay down your debts. Using websites such as readyforzero.com and mint.comyou can view all your accounts and liabilities from one portal and create a schedule to pay off your debts.
Determine Your Timeline
Take into consideration how long you have until departure and the length of your trip when starting your savings plan. Ensure that you have enough income left over after your necessary current living expenses to put aside weekly or monthly to reach your savings goal.
Open a Travel Savings Account
Set up a separate savings account that you can dedicate solely to your travel fund. If you have trouble controlling your spending impulses (like myself) or if you need to hide money from yourself, (also like myself) I would recommend opening the savings account with another bank or removing your savings account listing from your online banking profile to discourage making withdrawals.
Another option is to use short-term high-yield investments such as money market funds or income builder funds to earn interest and dividends while you save for travel.
If you decide to use short term investments, I would recommend that you speak to a financial advisor about the different short term investments that are available.
I started saving 8 months before my adventure, so instead of using a saving account I opened a short-term High Yield Income Portfolio. I could then purchase shares to add to my fund in the same way one would make deposits into a savings account. My fund performed well and I earned $650 in growth and dividends to add to my travel savings.
This is the part that you hear about in every blog post about saving for travel. In order to keep on track with your savings plan or to help speed up your plan, you might have to sacrifice the less important expenses in your life. For example, if you cut down on shopping, stop drinking at bars and stop eating out, you have the potential to save hundreds if not thousands of dollars per month.
When I was creating my savings plan I realized that I was spending over $1,200 a month at bars and restaurants. Just by cutting down on these two expenses I was able to put thousands more aside for my adventures.
Execute your plan!
From the time you create your savings plan to the date of your trip, you will need to stay focused on your savings goal. There will always be unexpected costs that could set back your saving potential. Stay motivated and keep your goal in mind.
Good luck with your saving!