Firstly, you need to figure out how much your trip is going to cost so you know how much you need to save. For this, you need to create a travel budget.
How to create a budget
In this article, we want to focus specifically on how to savemoney for travel. Although you need a trip budget so you know how much to save, budgeting is an entirely different topic. We’ll go over the basics here but for a more in-depth look, take a look at this article.
What to include in a travel budget (the basics):
How to find out how much things cost
Flights: Research the rough dates you wish to travel and use this article:
Now you have a rough idea of how much money you need overall, it’s time to compare this with your financial situation. This will tell you how feasible your trip is, and how long it will take you to save for it.
Assessing your current finances
Firstly, figure out your current expenses. This means breaking down everything you spend in a month and adding it up to get a total. If you can’t add it up yourself, keep track for a month and use that as an example. Compile a spreadsheet with all your outgoings.
A basic standard month’s expenses might include:
Student Loan: $200
Public Transport: $100
Cell Phone: $60
Social Activities (drinking in bars, movies, going out for dinner): $400
Miscellaneous Costs (clothes, music, video games, perfume, repairs etc.): $150
You will, of course, need to change this depending on your own personal expenditure, but it should give you an idea. Your outgoings might look completely different depending on what you spend your money on!
Determining savings potential
Now you know how much you spend each month, assess this against your income for your savings potential.
Let’s say the above is accurate for you and your take-home pay is $2300/month. You know you should be able to comfortably save $300 per month without actually making any changes to your lifestyle.
3. Create A Saving Plan
Now you know:
How much you need for your trip
How much you currently earn
How much you currently spend
It’s time to create a solid plan.
Setting a goal
Base your savings plan around your long-term goal.
Most likely this will be to save X amount of money for your trip (your trip budget) in X amount of time.
You should also include some short-term goals. These might involve getting rid of some debts first or making cuts to how much you spend (we’ll get to this in the next section). Aim high, but be realistic.
Choosing a method
Decide how you will save – This part will detail how you plan to achieve the goals you set.
This could simply be by being strict with your current spending levels, removing unnecessary expenditure (again, we’re getting to this) or even gaining some additional income (see below!).
Put your plan in motion – Stick to it!
4. Open a savings account
Open a savings account so you can start to put money away each month.
DO NOT keep your travel fund in your checking account. Firstly, it’s far too easy to spend it and tell yourself “I’ll put it back later”. Secondly, your money could be doing better in a higher-yield account.
Instead, open up a savings account of your choice and move a pre-planned amount of money over to it immediately after you’re paid.
How to find a savings account
Nerdwallet recommends the best savings accounts if you’re based in the US.
Otherwise, the Moneysavingexpert has the low-down on how to find the best savings account for you.
5. Track Your Spending And Reassess
How to keep track
I like to use Mintto help keep track of my finances and ensure I stick to my savings plan. It’s an extremely useful resource that allows you to link your bank accounts to the app and create goals within the app so you can see how you’re doing.
Saving is hard, and tracking your expenses is an important part of learning. Be strict, but don’t beat yourself up if you have a bad week. Just make sure you improve the next time!
Reassessing your savings plan
You might find that your saving plan changes over time. Reassess your progress every month. Was your initial plan feasible? Or do you need to make some adjustments? Scrutinize for where you can make changes along the way.
Making Cuts To Unnecessary Spending
Now your finances are in order and you’re ready to save, it’s time to start putting some of that saving enthusiasm into action. Unfortunately, making cuts is one of the most effective means of saving money for travel.
It all comes down to the wants vs needs arguments. If you don’t NEED something, going without could save you money. Try to stick to your budget.
Here are 14 realistic ways you can make cuts to your current expenditure:
Eating And Drinking
For me, eating and drinking are some of my biggest outgoings. I tend to go out to socialize a lot. But that also means it’s one of the best ways to cut down and how to save money for travel.
1. Make your coffee at home
I like coffee as much as the next person, and don’t get me wrong, I drink a lot. But, cutting back on buying coffee at the coffee shop can be a major boost in your quest to save money for your travels.
What do you spend each day on coffee from the coffee shop? $7?
By making that coffee at home you could save yourself $50 per week, or over $200 per month…
Spending less on your lunch is super effective and easily done. How much do you spend on lunch and a drink each day? $10? Cut this down to $5 and you’ll save an additional $100 per month! Go for the cheaper option and remember you’re doing it for a reason.
Cook in bulk at home and take your lunch to work with you. You might be shocked at how quickly the savings add up.
3. Stay in at night
Drinking in bars is a sure-fire way of blasting through your monthly budget. Believe me, I know how hard it is to turn down a night of partying. But, if you really want to save money for travel, focus on your goals.
You can still enjoy yourself…
Invite your friends round for the evening instead of going out. Think about the price of a 6-pack vs a round of cocktails at the bar… that’s some serious money into the travel fund!
4. Eat out less
Now is the time to learn to cook. Yes, eating out is fun and convenient, but it will put a serious dent in your wallet. Cutting down is a real money saver.
It’s extremely easy to buy low-cost, healthy ingredients and cook at home. You’ll find you can comfortably eat on a budget of $50 per week by cooking with simple ingredients.
Not too enthused about cooking?
Challenge yourself to make some interesting recipes. You might find you really get into it and even cooking with pricier exotic ingredients is cheaper than eating out.
Unneeded Memberships and Subscriptions
5. Cancel your unused gym membership
I am not for one second suggesting you shouldn’t exercise. I like to take my health and fitness (semi) seriously and tend to have a gym membership of my own when I’m settled in one place.
However, I also know a lot of people who pay a hefty monthly membership, and rarely (or NEVER) use it! Be honest with yourself, are you getting value from your gym? Most gyms will offer a day pass – it might be more cost-effective to occasionally pay this if you don’t go uber regularly.
If you’re really committed, you can even stop going to the gym and exercise in the great outdoors. There are plenty of sports and exercises you can do in the fresh air that won’t cost you a penny.
6. Get rid of cable TV
You might be surprised at how much of a saving you can make if you can go without cable TV. Even the more affordable plans of just $100 a month add up to $1200 per year. That could easily pay for flights to the other side of the world or even an entire trip!
Netflix and other TV subscriptions cost roughly $10 per month, so if you really can’t cope with the regular channels, sign up for one of those instead.
That being said…
7. Cancel any unnecessary TV/Shopping/Music subscriptions
You could be overspending by subscribing to multiple services that you don’t even use! I know I have been guilty of this in the past. Take a real look at your media subscriptions. Do you really need Prime TV, HBO, and Netflix?
I like to keep my Spotify subscription as I frequently listen to music on the go BUT I have a family account.
What’s a family account I hear you ask?
Well, your family members (or friends) can all use the same subscription making it much cheaper. Consider gathering some friends and setting one up here: Spotify Family Account
8. Reduce your cell phone contract
Are you overpaying for your cell phone plan? Could you cut it down?
Firstly, check that your monthly bill matches your contract and that you’re not already paying more.
Next, look at when your contract runs out. If it’s already run out you could move straight over to a sim-only contract and save yourself $50 a month.
Check your allowances at the end of the month and see what you’ve used. You may be able to change to a plan which better suits your needs and costs you less.
How to find a better deal
Use a comparison website such as UpPhone to see if you could get a better deal with another network.
Get into the habit of shopping frugally and you will make cuts to your expenditure without even thinking about it.
9. Shop around
Compare prices for everything you buy. Don’t just settle for convenience – that will cost you. A quick scan of prices in the supermarket, for example, will show you which are the cheapest brands. The savings will all add up.
10. Buy in Bulk
Bulk-purchase any items that you’re constantly using and re-buying. Think alcohol, groceries, toilet paper, shower gel, laundry detergent. A larger outlay in the first place will help you save money for travel in the long run.
Simplifying Your Lifestyle
Simplifying your current extravagant lifestyle could be a clever way of making cuts and therefore saving money for travel. There are several ways you can do this.
11. Do free stuff
There are plenty of free things you can do with your spare time, instead of splashing the cash on costly activities. Here are a few ideas:
Go to the park
Visit the library
12. Reduce your utility bills
Simplify your life at home and reduce your bills to save money for travel.
Use the heating less and wrap up in warm clothes
Use the air-con less and open the windows
Turn off the lights when you leave a room
Do fewer loads of laundry
Shorten your showers
Let’s say your utilities are $100 per month (within the US average). If you can be a bit more efficient and cut down your usage by just 20%, you could save an additional $240 over the year.
13. Take public transport
Cars are expensive with fuel, insurance, and trips to the mechanic. It might not be the most convenient, but public transport is a lot cheaper in the long run. Even better, walk or cycle when you can as this is free!
14. Spend less on your appearance
We tend to spend a lot on our appearance these days. We all like to get a haircut or buy some new clothes.
Do you really need that new outfit for your friend’s birthday? Or, realistically, can you find something nice that you already own?
Charity and thrift stores are an awesome way of finding cheap clothing and you can find some cool unique pieces if you’re willing to search.
Increasing Your Income
Bringing in some more money could be another way to boost your savings.
Here are a few ideas:
Do you have expensive items that you never use?
A Mountain Bike? Computer? Spare phone sitting in a drawer?
Selling one or some of these items could give you a much-needed cash injection.
Be realistic with yourself. If you don’t use something, it could contribute to your travel fund.
If you can sell your car and take public transport instead, you could save a fortune. Not only will you receive the cash for your vehicle, but you’ll no longer need to pay for fuel, insurance or to fix things that go wrong!
Work Extra Hours/Take A Second Job
If you’re able to, take extra shifts at work or get a second job.
It’s always tough doing additional hours. We’ve all been there. But keep your goal in mind. Those extra few hours per week will really start to add up over a few months.
It will all be worth it when you’re swinging it in a hammock on the beach, pina colada in hand.
Find An Alternative Means Of Income
If finding a second job/picking up more hours is not an option for you, but you still want to earn some extra cash, consider doing one of the following:
Complete paid online surveys
Become a mystery shopper
Become a product tester
Tutor students in a subject you’re comfortable with
Take on some freelance work – Find work here Upwork.com (for more information on freelance work see our article on working whilst traveling)
You can also continue to work while you travel! Take a look at our extensive article which outlines the many ways you can continue to earn whilst away:
Saving can be hard work – you will no doubt encounter the temptation to splash the cash. I like to set my phone background to a picture of the place I’m super excited about visiting or even pin one up on my wall.
Sometimes you just need a reminder of why you’re doing this. You will get there, and it willbe worth it!
Now it’s your turn
Which tip on how to save money for travel did you find the most useful?
Or do you have another way you like to save money?
Either way, leave a comment below and let us know!