How to Start Saving Money for Vacation: 5 Simple Steps

Saving money for vacation doesn’t have to be out of reach. While it’s true that you might not be able to whip out one or two thousand dollars to hop on a plane tomorrow, with some planning ahead and realistic goals, you can be taking your next trip sooner than you would think.

This might sound a little nerdy, but one of my absolute favorite pastimes is Googling the logistics for trips, travel, or vacations. There’s just something about figuring out how far away the rental car place is from my hotel that gives me a rush.

Because I love logistics, making a plan to save money for the trip also comes very easily to me. Below I want to share my five steps for planning, saving for, and finally taking your next vacation in just a few months.

1. Do some research on where you want to go (and when)

This step might seem painfully obvious, but before you even think about saving money for your vacation, you’ll want to figure out where exactly you’re going and at what time of the year.

I’m often astounded when I hear my friends say things like: “I want to go on a trip to Costa Rica, and I want to do it for less than $500. Can we make that happen this summer?”

A quick Google search immediately revealed that the tickets for Costa Rica in June were already over $500. Some were as high as $600 or $700.

And that didn’t even begin to scratch the surface of the other things we would have to pay for: hotel, car rental, and food.

Before you set your hopes super high for a particular destination and decide how much money you’re comfortable spending, do a little research to determine if it’s even feasible for you. You should research things like the cost of the flight (including things like checking a bag or paying for the seat you want), hotels and accommodations, rental cars, and the average cost of food and activities in the area.

Once you have a general ballpark of what it’s going to cost you to go to a particular location, you can make a more informed decision on whether it’s something you’ll reasonably be able to afford in the near future.

2. Start tracking your spending

I know this is one of the things people hate to hear and couldn’t want to do any less, but I promise you it will be an absolute game-changer when it comes to saving money for your vacation (and your overall financial health in general, for that matter).

Tracking spending doesn’t have to be as daunting as it’s made out to be. I think oftentimes people imagine huge, complicated spreadsheets, where they have to spend hours each day painstakingly entering numbers and choosing from 1,000 categories to put the expense into.

However, this couldn’t be further from the truth and tracking your spending can actually be extremely easy. I’ve been tracking mine every single day for almost four years, and I’m only able to do that because it only takes me two minutes each day.

There are great apps that help you do this – just search for any “budget” app in the app store and you’ll have a variety of options to choose from.

I personally prefer to do it manually because I found with apps that the categories were often inaccurate for what the expense actually was. This basic budget template can help you get started.

If you don’t want to create a budget yourself, the “Monthly Budget” template from Google Sheets is also a great choice for beginners – it’s free and a breeze to use.

I choosing one of these tools and tracking your spending for at least two months. Each day (or every other day), record the date, how much you spent, and what category it falls into.

The goal is that you want to have an idea of how much money you’re spending compared to how much money you’re making each month.

3. Create a savings plan

Now that you know where you’re going and how much extra wiggle room you have to play with each month, the next step in saving money for your vacation is to create a savings plan. Essentially, you’ll want to decide how much you’re willing to save each week, two weeks, or month for your trip.

When I was saving up for my first trip to California (which unfortunately never happened due to the pandemic 🙃), I used an app called Qapital that allows you to create a goal, set rules for the goal (i.e. how much will come out of your account and how often), and automatically drafts it for you from your checking to your Qapital savings account based on those rules.

Setting a goal and savings rules

Since the goal for my trip was $1,500, I set this number as the overall savings goal. I then created a rule to draft $35 out of my account every week (or about $140 each month). $140 a month was a comfortable amount of money that I could take from my budget without missing it too much. This weekly rule meant that I would need to save for about 43 weeks, or roughly 10 months, to reach my goal.

It was great because not only was it completely on autopilot, but because it was in an account that was separate from all my other accounts, it was easy to completely forget about it and not feel tempted to spending it on something else. Whether you use Qapital or another app like it, I highly encourage using one because they have built it automaticity and accountability.

If you don’t want to wait 10 months (or longer) to plan your trip, but you’re struggling with finding enough extra money in your budget to increase the speed of that timeline, keep reading on for the next tip.

4. Choose one option below:

Reduce your expenses

Now that you’ve tracked your expenses for a little while and have a solid idea of where your money is going, this is a great opportunity to see where you can cut back on expenses and put those extra savings toward your trip goal.

Let me quickly throw in the caveat that I normally hate this type of advice when it comes to personal finance in general – saving $5 a day on coffees at Starbucks is not going to make anyone a millionaire in the future. But when it comes to saving money for a vacation that’s only a couple thousand dollars, small savings can add up to a huge difference.

Let’s say you are someone who spends $5 a week on coffee each morning before work. If you were able save that $5 each day instead (or an extra $25) a week, this could cut the saving time for your trip down significantly. Saving $50 a week instead of $35 for my California trip would have cut the wait time down to just 25 weeks – HALF of what it was before.

Increase your income

If you truly are already living at the bare minimum and can’t afford to cut your expenses any more, or you are even losing more money than you make each month, I strongly recommend finding ways to make more money instead of spending less money.

There are tons of extra ways to make extra money on the side, but one of the quickest and easiest ones I recommend and did personally was some kind of gig app (think DoorDash, Instacart, Uber, etc.). I love them because you can typically start right away, and the payouts are fast and predictable.

When was in graduate school, I used to drive for DoorDash on the weekends and days I didn’t have class during the week. If I was able to get in at least 6 hours a week, I would easily make $100 that week. Adding that to my California fund would have cut the goal time down to just 11 weeks.

There will always be a limit to how much money you cut, but there is no ceiling to how much you can earn!

5. BONUS: Use credit card rewards

If you’ve made it to this step, you should be on the path to saving money for your vacation and be good to go! But as a bonus tip, I also wanted to throw in the power of using your credit card points to get even more savings for your trip!

Credit card point and rewards are basically like free money, and everyone who qualifies for a credit card should absolutely be taking advantage of them. Essentially, credit card companies want you to spend as much money on the cards as possible (so they can earn more interest), so they offer their customers different welcome bonuses for hitting a certain spending goal when they open the card.

In addition to the welcome bonus you receive, you will also get points, cash back, or some other form or rewards any time you spend money on the card. How many you get and what kind will vary by the credit card company and the type of card you select.

How to choose a credit card

My recommendation is to do some research on the card that might be best for you, read about its welcome bonus and rewards structure, and decide on one to open. Make sure you hit the rewards goal in the allotted time frame, then continue to use the card for all of your purchases and pay it off in full each month.

If you do this, you should be racking up on points that you can use for all things travel!

Let me add a warning that this method should NOT be used if you struggle with overspending, are already in credit card debt, or don’t make enough money to pay off the credit card every month. It’s very important that you don’t start collecting interest on the card just for the sake of getting points – it’s not at all worth it.

Conclusion

While saving several hundred or thousands of dollars can sound daunting at first, especially if you don’t already have a saving habit, saving for your next vacation is totally within reach. All it takes is some careful planning, understanding where your money is going, and possibly making some sacrifices to spend less or earn more each month.

I’m confident and hopeful after reading this guide, you’ll be on the plane to your next destination in no time!