How many of you can find financial reasons to postpone or cancel your vacations? If you raised your hand or took more than two seconds to come up with an answer, I challenge you to continue reading.
I can confidentially say that we’ve all been there.
Our finances can absolutely undermine our ability to travel. This is why I created this step-by-step financial travel series. My goal is to help you become a financially savvy traveler. I want to see you go on those epic trips that you’ve always dreamed about.
It all started when I decided not to let any of my financial obligations (student loans, bills, saving for a house and retirement) hold me back from seeing the world.
You shouldn’t either!
6 Steps to Becoming a Financially Savvy Traveler
Step 1: Create a Budget
Being a financially savvy traveler starts and ends with a budget.
Your travel budget details your anticipated travel expenses. The more detailed the budget, the more likely it is that you’ll go on vacation. Why? Well when you anticipate how much your trip will cost, you can save appropriately!
There are three major categories in every travel budget: Airfare, Lodging and Food. Since these are your basic necessities, estimate them first. Other categories to include in your travel budget include activities, public transportation, and gifts.
Action Plan: Calculate how you much you will spend in each budget category. Next, pick at least three destinations that fit your basic budget (airfare+lodging+food).
Step 2: Sign up for Notifications
Action Plan: Sign up for daily email notifications. Set flight price alerts for your top three destinations. Watch out for price reductions and spikes. If prices get too high, start ruling destinations out.
How I do it: I sign up for daily notifications with Skyscanner and Kayak. Skyscanner has great search capabilities where you can search “everywhere” and filter by specific dates or an entire month. Keeping an eye on the price trends helps me narrow down my destinations. This also helps me know when I’ve found a good deal!
Step 3: Get a New Credit Card
Action Plan: Open a new credit card and take advantage of the sign-up bonus. Use your credit card often and apply any rewards towards your next vacation.
This goes without saying but always swipe responsibly.
Step 4: Create a Travel Fund
Action Plan: Open a high-yield saving account with an online bank to take advantage of high-interest rates. Designate all your travel savings and expenses to your travel fund. Make sure the account comes with a free debit card.
How I do it: I have a money market account with Ally Bank. They offer relatively high-interest rates, no maintenance fees, and easy access online.
[For more U.S. travel-friendly banks, here are my top picks.]
Step 5: Save Money, Honey
Action Plan: Set time bound savings goals. Calculate how many weeks you will need to save for your next vacation. Automatically make deposits to your travel fund.
It’s easier to save the same amount every pay period.
How I do it: To save $2,000 for a trip to Germany in 20 weeks, I have to save $100 per paycheck.
Step 6: Pick a Destination
Action Plan: Commit to a destination that fits your budget. Consider traveling to cheaper destinations like Southeast Asia, Central and South America, India and Nepal. Also, with a strong US dollar, so much more of the world is now within financial reach.
One of my favorite travel budget tips from Phenomenal Globe is to keep your plans as flexible as possible. Don’t forget flexibility with your dates and airports will likely save you money.
As soon as you have enough money saved to book flights and lodging (basic budget) make your reservation. You will have plenty of time to finish saving for food, activities, transportation and gifts later.
Helpful tip: Some travel enthusiasts pick a destination first and then plan a budget, however, I find that a financially savvy traveler should keep finances in mind first and foremost. It’s a foolproof strategy – trust!
There is no point in budgeting for an exuberant trip that you cannot afford now or in the near future.
What travel planning tips would YOU add?
Author: Danielle Desir
Danielle Desir is a Travel Finance Strategist that uses her financial background and knack for financial planning to empower those who want to travel afford travel and excel in their personal finances. She shares creative planning strategies, saving tips, cheap flight deals and even talks about her student loan repayment journey on her blog, The Thought Card. Her financial expertise has taken her across the globe to over 19 countries and 3 continents (and counting), all while paying off her student loans, saving for a house and working full-time.
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