You want to travel the world. Who doesn't? The biggest obstacle to achieving your traveling dreams is probably your budget. Most of us have dreams bigger than our savings account. It's also a luxury, something we pay for after home and education and basic costs of living. No one has infinite funds available. But everyone can save a little something for their dream trip.
How to Build Savings for a Dream Vacation
Here's how to build savings that will turn those dreams into reality.
- Set a specific goal. Don't just say you'll "travel around the world" or "take a cruise." Decide where you want to go, and have some idea of how long you want to stay and what you want to do while you're there. "Two weeks bicycling around Scotland in the springtime" is a more achievable goal than "take a second honeymoon," just because it's more specific.
- Motivate yourself. Why do you want to take this trip? Cut out photos of the places you want to visit, write a letter to yourself with the details of what you hope to see and do, make a list of ways this trip will change your life. Post it somewhere to remind yourself to stay focused and excited.
- Set a budget. Now that you know what you want, figure out how much this is going to cost. Explore the price of transportation to your destination, lodgings while you're there, and the cost of any events you plan to attend or attractions you'd like to see. Do you want to see a Broadway play? Visit a museum? Swim with dolphins? Take all these costs into account, and then add a buffer to cover unexpected expenses. Ramit Sethi, author of I Will Teach You to Be Rich, suggests a 20% buffer to cover costs you didn't think of when you made your plans.
- Start saving. Open a high yield savings account dedicated to your dream vacation. I use ING Direct for this, because it's so simple to set up targeted savings accounts within your master savings account. Set aside some money every week or twice a month--some automated schedule that makes sense given your income and expenses. Your best bet is to have the automated transfers deposited directly to that high yield savings account. You can also dedicate any "extra" money that comes into your life through windfalls, bonuses, or yard sales to your travel fund.
- Stay disciplined, and leave the savings account alone. If you're at the stage of your financial life where you're saving for a dream vacation, you presumably have no major consumer debts and have built up a solid emergency fund. Let the travel savings be just for travel. If your car needs repairs, that's what your emergency fund is for. If your friends want you to buy concert tickets you can't afford, just think how good relaxing in that Parisian cafe is going to feel. This is where looking at your motivational photo collage or wishlist can really come in handy.
- Keep looking for ways to save on your trip. Do you have a club membership or alumni affiliation that will get you a discount on hotel rates and car rentals? Can you turn those gift certificates your aunt gave you at Christmas into a new backpack for your trip? Find creative ways to get around spending as much as you'd budgeted for, and you can get more out of your vacation.
- Enjoy your success! Once you've hit your savings goal, go ahead and book those tickets, guilt-free. Live your dream and savor it. You've earned it--through hard, focused work and the best savings account rates.
Saving for a dream vacation can help you enjoy the trip even more when you do take it, because you'll be enjoying not only your vacation, but the pride of having accomplished a goal. And if your dreams change during the time you're saving towards them, no worries. The cash in a savings account is about as flexible a resource as you can have. The money you were saving for plane tickets to Paris will be just as well spent on a cruise to the Bahamas if your travel plans take a twist.