The Easy Way to Save Up a Big Travel Budget
Traveling is an undeniably amazing experience, but as with so many of the finer things in life, it does come with a price tag attached. Cost is unfortunately one of the biggest factors that prevents people from traveling.
However, if getting to see the world is a serious goal of yours, this may be the perfect time to renew your focus on savings so that you can afford to pay for your wanderlust. (See also: 15 Ways to Save for Your Dream Vacation)
Set a goal and deadline
To help you get motivated to save more, set a clear goal and a timeline. The more specific the goal, the better, since it will allow you to visualize your trip and get excited about it. For instance, if you've dreamed about taking a trip to Europe for years, decide on your top destinations and how long you want the trip to last. That will help set a ballpark budget figure to aim for.
Next, attach a savings deadline — for example, decide that you will buy your plane tickets within the next six to 12 months. Don't give yourself much more time, or you'll lose the urgency to put money away now.
Having this type of a clear savings goal will help you stay motivated and make your trip feel more like a reality and less like a distant dream. It will also give you a schedule for your savings, allowing you to calculate how much you need to set aside each month to be able to afford your upcoming trip.
Slash unnecessary spending
Your goal will help you find the motivation to make some of the sacrifices that come with putting more money toward savings. You will want to shift your mindset from the short-term gratification of an immediate purchase (whose charm almost always wears off quickly) to the long-term gratification that comes from an experience that will leave you with memories for a lifetime.
You may be surprised to realize how much of your spending is discretionary. Think of anything you are spending money on that you could live without. For instance, you can save a lot of money by cooking for yourself, instead of going out to eat. Even less-than-fancy meals at restaurants like Panera or Chipotle can cost $7 and up. If you indulge in this convenience three times a week, you're spending $84 a month. Substitute each of those meals with frugal home cooked meals and save.
A car can be a significant expense, so if you can do without it you are setting yourself up for big savings. According to AAA, it costs the average American car owner around $8,558 to own and maintain their vehicle each year (this includes $3,759 in depreciation but doesn't include car payments). Even if you factor out the depreciation, that still means Americans are averaging $4,799 a year just to run our cars.
In contrast, Numbeo.com reports the average cost of a monthly transport pass in the United States is around $70, or $840 a year. If you live in an area with good public transportation, you could potentially pocket more than $3,900 a year by giving up your car.
If you can't completely forego having a car, you could still reduce your transportation expenses by driving less often. Walk, bike, carpool, or take public transportation instead. You'll not only save on gas, but also parking.
Need inspiration to cut costs? Consider this woman from the U.K. who essentially spent nothing for an entire year. While that may sound drastic, her savings while living in notoriously expensive London added up to nearly $27,000. Even half that amount would make a significant travel budget.
Work more, spend less
During one six-month period of my life I saved $12,000, which then allowed me to travel comfortably for the next six months without any income. I was able to do this by ensuring that my costs were as low as possible
I split a $500 studio apartment with a roommate, so my rent was only $250 a month. Living quarters were cramped, but I was hardly ever there. I worked three jobs so I could make more money (around $2,500 a month). My 50-60 hours-a-week work schedule also meant that I had less time to spend my earnings.
I was able to keep grocery costs to $100 a month because I was working in the food industry at the time. My other main costs were gas ($50 a month), and the cheapest cellphone plan I could find ($30 a month).
For fun, I mostly did free activities, taking advantage of the fact that I lived in the mountains in California. I could go hiking and biking for free and there were often free concerts in the evenings. When I needed new clothes for work, I would get them from the local thrift store for $10–$15.
Get rewarded for your purchases
There are many ways to use various types of credit cards so that you get rewarded for your necessary expenditures. Especially for major expenses such as gas, groceries, and plane tickets, selecting the appropriate credit card can help you save a significant amount of money. (See also: How to Save an Extra $1,095 a Year)
Grocery credit card
Groceries are a big expense for most people. Since you can't avoid spending at least something on groceries, you may as well get rewarded for your spending. Use a credit card that gives you extra rewards points for every dollar you spend at supermarkets. (See also: 5 Best Credit Cards for Groceries)
You may even be able to stack rewards by using a loyalty card from the supermarket chain where you do most of your shopping. Often these loyalty programs offer you cash discounts that can help cut your overall grocery bill.
Gas credit card
If you just can't live without a car, you can still save on the cost of gas by opening the right credit card. Cards that are co-branded with a particular gas station give you discounts at the pump, usually a few cents per gallon. These cards tend to have high interest rates, though, so if you tend to carry a balance, you'll usually be better off with a rewards credit card that gives you bonus points for purchases made at gas stations. If fuel is one of your bigger expenses, it's worth opening a gas rewards card. (See also: 5 Best Gas Rewards Credit Cards)
Travel credit card
Although you may not be traveling a lot while you save up for your big trip, it's worth getting a travel rewards credit card well in advance of your trip. By using your travel card for everyday purchases, you can rack up points toward free flights or hotel stays when it comes time to hit the road. (See also: 5 Steps to a Free Vacation in 9 Months or Less)
What's more, most travel cards offer significant points bonuses when you spend a certain amount within the first few months after opening the account. These bonuses can be worth hundreds of dollars in travel, but you'll need time to meet the required spending amount and wait for the bonus points to be posted to your account.
Finally, airline cards often come with free checked baggage and other perks such as free rental car insurance, lost baggage coverage, and trip interruption insurance. (See also: 6 Types of Travel Insurance That Credit Cards Include)
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