How To Start A Travel Fund (And Why You Need One Right Now)

Estimated Reading Time: 8 minutes

Dream of traveling the world? Whether quitting your job to become a digital nomad or planning a family vacation to Disney World, cost likely crosses your mind. Wondering how to fund travel? You are not alone. I’ve devoted this website and podcast, The Thought Card, to exploring this question. After visiting 27 countries, I’ve mastered starting a travel fund and budgeting for travel. Don’t let financial obligations stop you from pursuing your dreams.

Travel doesn’t have to be expensive, but it does cost money. While jet-setting no longer requires wealth, it can help. Still, budget travel is possible. That’s where smart financial planning comes in.

If you want to travel more, one of the first steps is creating a travel savings account.

To help you get started, let’s walk through step-by-step instructions on how to start a travel fund and ways to save regularly.

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In this episode, we cover:

• What is a travel fund?
• How to start a vacation fund
• How to save for travel by treating it like a recurring bill
• Best saving accounts for vacations

What is a Travel Fund?

A travel fund is a powerful tool to help you save money for travel.

A “travel fund” or “vacation fund” is a dedicated bank account (checking, savings, or money market) devoted to your travel savings and expenses.

It helps you intentionally save money for travel, so you have a stash to draw from when it’s time to spend.

Reasons To Start a Travel Fund

The more you commingle funds, the less likely you are to achieve your long-term and short-term money goals. Even with the best intentions, spending money on other things is easy if your funds are jumbled together.

Having a bank account specifically for travel makes things much easier. You can check your balance at a glance and know exactly how much you can spend. Isn’t that reassuring?

Have money available for travel when you need it.

In many ways, it gives you permission to spend on what you want.

Helpful Tip: Pay for travel expenses with your travel fund and only spend what you have. 

My Mindset: Although I love to travel, travel isn’t worth getting into debt. Debt is a vicious cycle that is hard to escape, so save money for a trip and travel when you can responsibly cover all your expenses. 

With that said, let’s explore (3) ways a travel fund can help you travel more and achieve your goals.

1. Keeps funds separate

When you commingle funds, you are less likely to achieve your goals.

This is why I have multiple bank accounts — a virtual envelope system where each account is set up for a specific purpose, a bill, or a goal.

A travel fund is important because it’s so much easier to save money for travel when it has a dedicated savings account separate from everything else.

This separation means that when you have to pay for a flight or want to go on a spontaneous weekend getaway, you can tap into the funds you set aside specifically for travel expenses, like flights, lodging, attractions, and more.

Helpful Tip: I recommend personalizing the account by renaming it “Cruise to Mexico” or “Disney Family Vacation.” This makes your next adventure feel a little more real (and that much more achievable).

2. Avoids overspending

Travel savings can also help you avoid debt and paying high credit card fees. To avoid using my travel savings on other expenses, I bank with Ally Bank, an online bank.

While Ally is easy to use, withdrawing funds takes a few days, making it less convenient than an ATM withdrawal at my brick-and-mortar bank. This slight inconvenience helps me avoid the temptation to dip into this account, thereby strengthening my discipline.

3. Keeps you grounded

Maintaining a travel fund helps me control my wanderlust.

Related: How Cheap Flight Alerts Work

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For example, today, I have $500 in my vacation fund.

That means I can confidently book those flights to San Francisco for $220.

On the other hand, I’m not quite ready for that all-inclusive trip to Costa Rica for $2,000.

Overall, a vacation fund makes travel more financially feasible. Know with certainty what you can afford.

How To Build a Travel Fund

Building a travel fund is essential to making your travel dreams a reality.

Here are (3) practical strategies to build and grow your travel fund.

1. Treat Travel Like a Recurring Bill

Instead of saving for one trip at a time, aim to save for travel regularly, even if you don’t have an upcoming trip planned.

This will keep you financially ready for opportunities when they come up.

Treat travel like any other recurring bill.

Include it as a line item in your monthly budget, making it a regular part of your financial planning. This will make travel a structured and intentional part of your life, enabling you to achieve your travel goals while managing other financial responsibilities.

Consider travel as essential as car insurance, rent, and gym membership.

Like a recurring bill, you’ll set money aside for it every month without fail, which builds consistency.

If you treat travel like a recurring bill, you can save hundreds or thousands of dollars by the end of the year. It all depends on how aggressively you save.

2. Start Small

Next, determine how much you want to save towards travel every pay period (weekly, biweekly, or monthly).

Start with an amount you can afford to miss as you build the discipline and confidence to increase your savings rate.

Small amounts can add up over time. Consider saving a little each week or month, such as the cost of a coffee or lunch, and watch how it accumulates.

3. Leverage Automation

You can set up direct deposit with your employer and choose the amount you want to transfer. This way, money from your paycheck will get deposited into your travel bank account every time you get paid. This way, your savings grow in the background without requiring constant attention. Go about your life – set it, forget it, and watch your travel savings grow!

Automation handles all the heavy lifting, so you never have to worry about moving money into your travel fund. It’s done automatically on your behalf. You’re essentially locking yourself in and sticking to your plans.

Helpful Tip: Don’t wait until the day or even the week after to move funds because you might forget. Automate your finances so that when you get paid, a portion of your check is automatically saved for your next vacation.

Related: How To Keep Your Vacation Fund Intact

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Ways To Boost Travel Savings

If you want to schedule additional automatic transfers to accelerate reaching your travel savings goals, by all means, do so.

1) Set regular automatic transfers into your travel fund weekly, biweekly, or monthly. Pick a transfer frequency and amount that works for you.

These additional deposits can be as small as $5 or as large as you can afford. The rationale is that these extra payments will boost your savings over time and help you reach your travel goals faster.

2) Savings challenges like the 52-Week Savings Challenge or $5 Bill Challenge can help you set aside extra cash.

With the 52-Week Saving Challenge in week 1, you save $1. In week 20, you save $20, and by week 52, you have saved $ 52. By the end of the challenge, you saved $1,378.

The Reverse 52-Week Challenge is the reverse of the 52-Week Challenge. With the Reverse 52-Week Saving Challenge, you save $52 in the first week, $20 by week 20, and $1 in week 52.

Savings challenges make saving money more fun, and at the end of the challenge, you’ll have a stash of cash waiting for you at the finish line.

3) Another fun option for saving loose change is to put it in a travel fund money box in a visible place in your home or office.

Here are some of my favorites from Amazon:

• Travel Fund – Piggy Bank
• Shadow Money Box For Saving Travel
• Adventure Fund Piggy Bank

Boost Your Travel Fund with Side Hustles and Smart Savings

Sometimes, setting aside enough money for travel feels tricky, especially when unexpected expenses pop up. That’s why it’s important to build not only a travel fund but also an emergency fund.

Having both gives you peace of mind: your travel fund grows uninterrupted, while your emergency fund covers life’s surprises.

If your budget is tight, consider side hustles as a powerful way to earn extra money specifically for travel.

Whether it’s freelancing, selling handmade goods, or driving for a rideshare, these extra income streams can boost your savings and help you reach your travel goals faster.

Remember, the goal isn’t just to have enough money…it’s to create financial freedom that lets you explore the world without worry. Treat your travel fund like a recurring bill, automate your savings, and use side hustles to boost those deposits.

Before you know it, your next adventure will be more than a dream.

Choosing the Right Travel Fund Bank Account

By now, you might be wondering, what’s the best bank account to save for travel?

While you can learn about the best traveler bank accounts, my personal favorite is Ally Bank.

Ally Bank is an online bank with high interest rates on savings accounts (around 4%), the ability to organize your savings into buckets to help visualize your goals, and boosters to optimize and maximize your savings.

Accelerate your savings with recurring transfers and automated roundups to the nearest dollar on every transaction. There are also no monthly maintenance fees or minimum balance requirements.

When you open a new Ally Bank Savings account for a limited time, earn a $100 welcome bonus!

What to look for in a travel bank account?

Generally, you want a bank with low fees, high interest rates, a reliable, easy-to-use mobile app, and good customer service.

Here are some tips for choosing the right bank for your travel savings:

• If you struggle with financial discipline, use an online-only bank instead of a brick-and-mortar bank.
• Look for banks that do not charge fees (maintenance fees and ATM fees).
• Choosing a high-yield savings account means more savings and more money available for trips!
• Customer service matters. Bank with an institution that offers 24/7 customer service support. We want to talk to humans.

How To Save For Vacations: My Personal Story

Tired of reading? Listen to this podcast episode on Spotify.

It all starts with your mindset. How important is travel to you?

When I first started thinking about setting financial goals for travel, it all began during my college years. I was experiencing a serious case of FOMO—fear of missing out—while watching my friends jet off to exciting spring break destinations. While I had enough finances to enjoy local outings, I couldn’t afford an international trip.

The pivotal moment came when I wanted to study abroad in France for a semester. The cost was astronomical, and none of my scholarships or grants covered it.

My family was facing financial difficulties, and I felt guilty even considering such an extravagant trip. This experience made me realize how crucial finance is in pursuing my travel dreams. I didn’t want to feel helpless or uncertain about when I could travel again.

After graduating, I committed to prioritizing travel in my life. I understood that I needed to be strategic and smart about my finances.

I reframed my relationship with money, viewing it not as a burden but as an opportunity to create experiences. I became a goal-getter, setting clear short-term financial goals aligned with my passion for travel.

I learned that saving for travel doesn’t have to be overwhelming. It starts with small, actionable steps.

I began by creating a budget that included a dedicated travel fund. I automated my savings by setting aside a portion of my paycheck for travel. This way, I could watch my travel fund grow without having to think about it.

Ultimately, my journey taught me that travel is not just a luxury; it’s a priority that can be achieved with careful planning and a positive mindset. By setting financial goals for travel, I transformed my dreams into reality, allowing me to explore 27 countries across four continents. If I can do it, so can you!

I hope this blog post has inspired you to overcome any financial obstacles preventing you from traveling.

In my guide, Affording Travel, I explain how to save for travel step by step. Learn how to seamlessly incorporate saving money for travel into your budget and simple ways to accelerate your progress, even if you’re starting with limited funds. It’s a quick read jam-packed with more of my best money-saving tips.

Planning a trip can be an exciting and daunting task at the same time. Whether you’re dreaming of a relaxing beach vacation or an adventurous trek through the mountains, the key to a successful trip lies in the planning. In the next blog post, we’ll dive into the essential steps for planning a vacation effectively, from choosing a destination to creating a detailed itinerary. Get ready to turn your travel dreams into a well-organized reality!

Do you have a travel fund? Why or why not?