Looking to learn how to build up savings for travel? Everyone needs a break from time to time. But since even short vacations can get expensive, it’s essential to have a vacation fund savings plan in place. Here are some of the best vacation savings accounts to help you take your next trip sooner.
Saving for travel can feel like an elusive goal with so many other expenses on your radar. But it doesn’t have to be. Whether you want to backpack across the globe, escape to a weekend retreat or stay at a luxury five-star resort, saving for vacation is within your reach.
Here are 16 tips on how to save money for travel that can help you take flight (or drive that car) faster than you think.
If you’re not already operating on a budget, consider making one. If you have a budget, now is the time to review it. Outline all of your expenses and how much income you have coming in.
Don’t be afraid to get detailed. If you eat out several times a week, consider adding a restaurant line to your budget. The point of a budget is to help give a clear and accurate picture of where your money goes, so more information can really help paint the big picture.
Look at any non-essential expenses to see where you can cut down and save money for travel.
Do you really need that streaming subscription? Can you try making gourmet meals at home instead of going to a restaurant? Can you brew your morning cup of coffee at home instead of buying it everyday?
You might even be able to save on some necessary expenses. Meal planning and sticking to a list can help you save money on grocery shopping. See if you can qualify for cheaper car insurance with a different insurance company. Free car insurance broker platforms, like Surex, can help you easily compare multiple offers at once.
Even if these savings seems small, they can add up to hundreds of dollars in travel savings by the end of the year.
Pro tip: The 30-day ruleTo help increase your savings for travel, cut back on impulse buys using the 30-day rule. The 30-day rule states that you wait 30 days before making any pricey purchases. You’ll often find that something that seems like a really good idea in the moment, might not seem worth the money 30 days later – and instead you can put that money in your vacation fund.
Create a travel budget based on where you want to travel – including transportation, accommodation, food, shopping and any activities – to calculate exactly how much you need to save for your rip.
Try to make an accurate travel budget by looking up how much hotels cost where you want to stay, how much transportation there costs and even how much the average restaurant in the area charges per meal.
Then set a timeline for when you want to book your trip so you know exactly how long you have to meet your goal.
Let compound interest help build up your savings for travel even faster. While standard savings account interest rates in Canada can range at around 1.5% at most, high interest savings accounts offer savings rates of anywhere from 2.5% to 5.0% or more.
That’s why it’s worth comparing vacation fund options to make sure you’re getting the most out of your money.
Setting up automatic transfers to your savings account every time you get paid can be a great way to consistently build up your travel savings without being tempted use that money elsewhere. You can then sit back and watch your savings for travel grow every month.
Having a travel fund jar at home can be an easy way to put loose change and any extra cash in your wallet towards your savings goal. It can also encourage you along your saving journey – as you watch your travel savings jar fill up, you can be reminded that all the other financial sacrifices you’re making are worth it.
Just remember to deposit the money in your savings jar into your high interest savings account to earn interest on it as well.
There are plenty of ways to lower the cost of travel. Consider using airfare comparison websites to make sure you’re getting a good deal on your flight. You should also consider booking your flight as far in advance as possible to lock in a lower price.
Another way to save on travel is to book during outside of peak tourist season. Hotel and airfare prices can all be lower by hundreds of dollars during off-peak seasons depending on the destination.
Hotels can be pricey. You can potentially save on travel expenses by opting to stay in hostels or by house-sitting. Airbnbs are another great option where you can potentially save by booking an entire home with a group of people and splitting the cost.
Cut down on the amount of savings for travel you’ll need to build up by avoiding expensive checked-baggage fees and only use carry-on luggage when travelling. That way, you’ll also never encounter the airport-lost-my-bag headache so common these days.
Some tips to pack light include:
Whether it’s paying for your flight entirely with rewards points or getting discounted hotel fare, there are plenty credit card travel rewards programs in Canada that help you save on travel. You can compare some of the best credit cards for travel in our full guide here.
If you know exactly what tourist spots you want to hit up on your trip, you can add that cost to your vacation fund. Plus, if you do a bit of research ahead of time, you can identify many free or low-cost activities in the area – like famous monuments, parks, street performances, hikes and local festivals.
It really is true that one man’s junk is another man’s treasure. Look around your home for any items or furniture you don’t use anymore and think about selling them on online marketplaces like Kijiji or Facebook Marketplace. If you put that money towards your savings for travel, you can build up your travel fund faster.
Taking on some side hustles can be a great way to earn some extra money towards your travel savings goals. Consider taking on a part-time job, helping a friend with their business, taking on some freelance work or maybe becoming an Uber driver in the evenings.
Using a credit card overseas typically comes with a foreign transaction fee of around 2.5%, which can really add up over time and increase your overall trip cost. Some credit cards in Canada come with no foreign transaction fee or offer other travel benefits and rewards that can compensate for the fee’s cost. Compare the best credit cards for travel in Canada in our full guide here.
Even after making your budget, it’s a good idea to regularly review your expenses to make sure your budget is still working for you and that you’re sticking to your travel savings goal. You may also find that there are some new ways to cut expenses and add more to your vacation fund.
It’s natural to get your heart set on travel plans, especially after you’ve planned and saved for so long. But it’s always a good idea to keep an open mind so you can take advantage of last-minute travel deals.
Let’s say you notice a discount for different travel dates than you had originally intended, consider switching your trip. Your trip can still be amazing even if some things are little different than you originally thought.
While how much money you should save for travel depends on your income, expenses and where you want to vacation, most experts suggest you use the 50/30/20 rule to put less than 30% of your income towards travel.
In order to use the 50/30/20 rule, first determine what your earnings are then divide up the funds into these categories:
Keep in mind that the 50/30/20 rule is meant to be a benchmark. No one will be able to divy up their finances this way perfectly, but it’s a good starting point for your savings for travel. Below is an example of how to calculate where your money is going using the 50/30/20 rule.
Sophie earns $4,000 in gross income a month and $1,000 is deducted from her pay for employer deductions. Her net earnings are $3,000 which means $1,500 (50%) goes towards needs, $600 (20%) goes towards savings every month and $900 (30%) goes to wants.
She then sets aside $300 every month from the “wants” category towards her savings for travel, leaving her $600 to put towards other non-essential expenses, like eating out, spa days and shopping.
If Sophie deposits that $300 every month into a savings account that earns 3% interest, she would have saved almost $3,959 towards her vacation after only 1 year.
While not all Canadians are in a position to save — with almost 3 out of 4 Canadians (73%) reporting that they spend more than they save each month — those that can save want to find a safe place to park and grow their money. For almost 1 in 4 Canadians (23.12%), the preference is either in a savings account or a high-interest savings account (HISA), according to survey data from the Finder: Consumer Sentiment Survey Q2.
A high interest savings account is one of the best ways to build up your savings for travel. We’ve summarized the details of some of the best savings accounts in Canada to help you save for a vacation:
| Min. Age | 18 |
|---|---|
| Account Fee | $0 |
| Transaction Fee | $0 |
| Interac e-Transfer Fee | $0 |
| NSF Fee | $0 |
| Min. Age | 18 |
|---|---|
| Account Fee | $0 |
| Transaction Fee | $0 |
| Interac e-Transfer Fee | $0 |
| NSF Fee | $0 |
| Min. Age | 18 |
|---|---|
| Account Fee | $0 |
| Transaction Fee | $0 |
| Interac e-Transfer Fee | $0 |
| NSF Fee | $45 |
| Min. Age | 18 |
|---|---|
| Account Fee | $0 |
| Transaction Fee | $0 |
| Interac e-Transfer Fee | $0 |
| NSF Fee | $0 |
| International ATM Fee | $0 |
| Min. Age | N/A |
|---|---|
| Account Fee | $0 |
| Transaction Fee | $0 |
| Interac e-Transfer Fee | $1.25 |
Use this savings calculator to figure out how much money you could save for travel based on how much money you want to set aside and for how long.
While searching for the best savings account for your vacation, consider a few factors that can help you compare your options:
Whether your travel plans are big or small, years in the making or spontaneous, there are always strategies you can use to build your savings for travel ang get ready for that dream trip. Remember it’s not worth going into debt to travel. Plan ahead to figure out how much your trip is going to cost and how you’re going to pay for it. Then, compare savings accounts to find an option that works for your financial strategy.
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