5 Easy Ways to Start Saving Now for Next Year’s Dream Vacation

published Oct 28, 2021
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Whether your ideal vacation destination includes an ocean-view villa, a quaint town, or a mountainside retreat, it can be good to get away from it all once in a while, especially after months of staying put. You may have mixed things up via staycations, virtual trips, and poring over old travel photos, but the fact is, sometimes the best way to recharge is to change up the scenery.

But whether you have a dream vacation on the books or you’re still waiting to see what 2022 has in store, the time to start planning is now. Your trip may be several weeks or a few months away, but paying for it can be within reach if you start stocking funds right away. Promise! Here are five ways to save for your next vacation.

Determine how much your trip will cost.

“Before you can start saving up for your next vacation, you need to decide how much you plan to spend on travel, lodging, activities, meals, and more,” says Josh Zimmelman, a managing partner at Westwood Tax & Consulting. Whether you’re eyeing a particular destination or simply need to budget a particular amount, knowing costs ahead of time is advantageous.

Break up your vacation expenses into a list of categories, such as accommodations, food, travel to and from, and attractions. “Do your research to come up with a price range for each category, giving yourself a reasonable buffer to account for unexpected costs or price changes,” recommends Zimmelman. However, if you leave your vacation open-ended, set aside what you can afford and select a location based on your projected savings. Either way, Zimmelman stresses that once you determine your budget, sticking to it is key.

Save slowly and steadily. 

Look at your current expenses and decide how much you can afford to set aside each month. No matter the amount you can spare, start socking it away intentionally. “Once you know roughly when you want to go and how much you need, you can calculate how much you need to save each week or month,” advises Baruch Silvermann, the CEO of The Smart Investor. “Set up a separate savings account and transfer the amount when you get paid.”

If you don’t have a set income each month, such as contract or freelance work, try designating a specific percentage of each payment instead of a predetermined amount. Also, be sure you can’t easily access the funds, so there is no urge to withdraw money if things get tight, and hide (or freeze!) your ATM card to reduce any extra temptation to spend. Another way to save without stress is to set up a savings account at a separate bank so your funds are somewhat out of sight — and off of your mind.

Build a timeline based on your budget.

Don’t be discouraged if you can only afford to allocate a small amount each month. Saving towards a goal can also help you determine when you can travel. It may take a year or longer to save up enough funds, but use this to your advantage to create an overall timeline. 

“Saving for anything is about breaking things down into steps. After you’ve decided on a site and a budget, the next thing to consider is the timeline,” says Donny Gamble, the CEO of Retirement Investments. For example, if you can afford to save $200 each month and are eyeing a $2000 trip, it will take you ten months to save up. You may want to book your vacation and secure your reservation once you’ve collected enough for a down payment, however, so make note of the minimum amount of money you’ll need to make that happen.

Assess your future budget before you consider a service that allows you to pay over time.

You’ve likely seen advertisements to use “buy-now, pay-later” programs for everything from clothing to new exercise equipment, and many of these services also want to help you spread your next vacation out over a series of monthly payment installments. Even smaller tour companies are offering “purchase now, choose later” down payment options to boost bookings and encourage folks to commit to traveling, for both international and domestic travel options. “Buying now and deciding later means there’s no need to decide where until you’re ready to travel,” says Ashley Blake, the founder of Traverse Journeys. It’s worth double-checking if that down-payment is refundable before you hand it over, and reading any other fine print about expiration dates and potential limitations.

Overall, use caution before committing to any one of these programs, and ask yourself if you can allot part of your budget for the monthly or weekly installments for the long term before signing up. Ashley Feinstein Gerstley, a partner with Affirm, advises that you must clearly understand your total cost upfront, including any interest or fees, and factor those into your monthly budget accordingly. “This way, you can make sure all your purchases are workable with future months’ spending, so you don’t overextend,” she advises.

It’s also worth making sure that you’re not spending more money than you planned, simply because you can delay payment. “People tend to spend more money when things are done in installments, because it can feel like you are spending less money,” Michelle Schroeder-Gardner, the founder of Making Sense of Cents, previously told Apartment Therapy.

Look for current deals and discounts.

If you’re interested in trying a destination not originally on your radar screen, be open to exploring deals to destinations trying to attract travelers. Many sites, such as Kayak and Travelocity, have sections that include deeply discounted vacations. “Depending on where you’re going, you might be able to find some deals,” suggests Zimmelman, who also notes that some organizations like AAA and Costco offer discounted travel rates to their members. Museums and theme parks may also have online-only tickets available at a reduced price.

If you are considering getting a new credit card and plan on traveling frequently, looking into getting a travel rewards card might be a smart idea given that responsible use can help you accumulate vacation points or secure sign-up bonuses. “You can save a great deal for your vacation by being alert to deals and discounts,” suggests Silvermann. “For example, obtaining a new travel rewards credit card could allow you to earn additional points when you book your airfare or hotel. It could even allow you to save on foreign transaction fees if you’re planning an international break.” 

That said, always read the fine print when it comes to lines of credit; a new card could serve as a temptation and outweigh any benefits or points you could collect. No matter where and when you plan to go, a bit of research and creative thinking can help you save before you can finally safely get away from it all.