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So you’re dreaming of a weeklong vacation lounging on white sand beaches with a margarita in your hand. That kind of luxurious leisure may seem out of reach at the moment, but there are ways to save money before (and during) the trip that can help you afford it more comfortably. Automatic transfers into a savings account can make it easier for you to set aside money. At the same time, savvy scheduling of trip dates and airfare purchases, plus the use of travel rewards cards and frequent-flyer points, can all potentially bring down your costs. Let’s look at how to save for a vacation so you can pay for the getaway you need to relax, rejuvenate, and recharge.
Planning a Vacation
Before you start saving for holiday getaways, you’ll need to make a plan for your vacation. Budgeting is one of the first steps. Start by researching costs for:
Airfare
Lodging
Meals
Rental car
Excursions
Souvenirs
There are ways to cut some of these costs. For example, booking a hotel in the heart of a city, village, or resort area might make it feasible for you to walk everywhere – meaning you could do without a rental car. If you were to rent an apartment or house, you could buy groceries and eat some meals at home, which would cut down on restaurant spending. If you plan far enough in advance, you can track airfares over time and buy your ticket when prices are lowest.Overall, the key is to stick to your budget.
Average Cost of a Vacation
Part of learning how to save for vacation is figuring out how much you need to save. Of course, vacation costs can vary wildly, depending on where you’re going, what kind of accommodations you book, and how luxurious or basic you decide the trip should be. According to the crowdsourced cost estimator Budgetyourtrip.com, the average per-person price for a one-week U.S. vacation is $1,578 (as of late December 2022). Traveling with a partner or friend may lower the per-person cost a bit, since you’re likely sharing the hotel room and the rental car. If you travel abroad, costs will probably be higher.
10 Ways to Save Money for a Vacation
Now let’s discuss how to save for a vacation. Choose a strategy – or more than one, if you want to get results even faster.
1. Cut Out an Unnecessary Luxury
How much do you spend on cappuccinos every week? If you put that money aside instead of spending it on your caffeine fix, you’ll be that much closer to relaxing on the beach. Chances are you won’t even regret skipping that daily coffee when you’re making fantastic vacation memories.
2. Roll With a Carry-On
If you can fit everything into a carry-on, you’ll avoid checked-bag fees. Rather than packing a different outfit for every scenario, try to cut back. Ask yourself how often you actually wear all the clothes you bring. Check the weather so you know exactly what apparel and accessories you’ll need. Bring versatile basics like t-shirts and scarves to wear more than once.
3. Use a Travel Rewards Credit Card
Did you know that every time you make a purchase with a travel rewards credit card, you earn points that you can redeem for flights and hotel stays? Credit cards are often associated with different airlines and hotel chains; some travel rewards cards let you use rewards for any trip-related expense. You’ll save the most money if you always pay your balance in full before getting hit with high interest rates.
4. Refinance Your Debt
Sometimes refinancing student loans or personal loans can reduce the interest you’re paying. This tip might seem strange in the context of saving for a holiday, but your interest savings could go toward your vacation fund.
5. Track Prices
Prices for hotels and airfare fluctuate throughout the year. Analysis of airfare data has shown that, for cheaper domestic flight prices, the time to buy is roughly 76 days before your planned departure day. Use a flight price tracker that will notify you when to book, and you can save hundreds on your ticket.
6. Travel Off-Season
In summer, with kids out of school, more people travel – so prices tend to be higher. By scheduling a trip during the shoulder season (April - May or September - October), you may be able to pay drastically less for flights and accommodations. Plus your destination won’t be so crowded.
7. Use a 0% Credit Card
If you use a credit card to book your travel, the interest can be a significant cost unless you pay your balance in full each month. In addition to a travel rewards card, recommended above, a 0% APR credit card can help you pay for your vacation. These cards charge no interest for at least six months (14 months in some cases). You can book your vacation without added cost, as long as you pay off the balance before that promotional 0% rate goes away.
8. Buy Groceries Rather Than Eating Out
Dining at restaurants for every meal can really add to your vacation costs, especially when you’re traveling with your family. If you stay at an apartment or house with a kitchen, you can save big bucks by buying groceries and cooking your own meals. Alternatively, book a hotel that offers free breakfast; that way you sidestep the cost of one meal per day.
9. Join Frequent Flyer Programs
Every major U.S. airline has a frequent flyer program that lets you accumulate points with every flight. If you’re loyal to one program, it won’t take long for you to earn enough points to redeem for a free flight or an upgraded seat. You can also pair this tip with using a travel rewards credit card if you get one that’s branded by your favorite airline.
10. Save a Little Bit Every Month
Especially if you have a low savings account balance, it may take a while to save the money you’ll need to pay for that vacation. But you can take actions to set aside money systematically, such as arranging an automatic monthly transfer to your savings account. Recommended: What Is Cash Stuffing?
Average Amount of Money to Save for Vacation
There is no one-amount-fits-all vacation cost. The total amount you’ll need will depend on your budget for your specific holiday, as discussed earlier. However, once you know how to save money for trips, you can roughly estimate when you’ll have enough funds saved up. You’ll be able to pinpoint the date more precisely if you’re putting money aside through automatic deposits each month.
Places to Keep Your Savings for a Vacation
One more important principle when you’re learning how to save for vacation expenses is to keep that money separate. Consider opening a savings account specifically for your travel expenses, if you don’t already have one. That way you might be less tempted to spend the money than if it were sitting in your checking account. Bonus: Money you keep in a savings account will earn interest over time.Recommended: Guide to High-Yield Savings Accounts
The Takeaway
Planning and budgeting – which can include cutting out unnecessary expenses – will help you reach that beach sooner than you think. You can lower your costs by carefully timing your trip and your plane ticket purchases, as well as capitalizing on travel rewards cards and frequent-flyer points. Regular, automatic transfers into a savings account can also help you set aside money more easily. Need to take that vacation even sooner? Lantern can help you find the right personal loan with low interest rates.
Frequently Asked Questions
What is a good amount of money to save for a vacation?
What is a good amount to save each month for vacation?
How much does the average person spend on vacation?
Photo credit: iStock/DaniloAndjus
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About the Author
Susan Guillory
Su Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.
