Achieving a goal usually takes time and planning.
If your aim is to go on a dream vacation next summer, starting to save and plan now can be a great strategy. Like most goals, it’s easier to get to where you want to go when time is on your side.
Saving a smaller amount consistently over a longer period of time is easier than saving a large amount in a short time period. By planning your saving strategy and travel-booking ahead of time, you may be able to save money on the cost of a vacation, too.
Not being able to afford a vacation was the most popular reason people didn’t plan on going on a vacation this summer, according to a Bankrate survey earlier this year. But by setting aside money and organizing your trip now, your vacation next summer could possibly become a reality if you follow the following six steps.
1. Make a budget
If you don’t already have a budget, that’s going to be the first place to start. Otherwise, it’s going to be very difficult to follow a consistent savings plan.
Cutting expenses and actually earning money from other sources, are possible options. For instance, selling items around the house, taking on a side hustle or spending less are all ways to make saving for next summer’s vacation more achievable, says Ted Rossman, industry analyst at Bankrate.
An audit of your recurring monthly expenses could identify things you can do without, freeing up money to allocate toward a savings goal. Another way to save would be by sacrificing a night out a week for dinner, and instead save that money for a dinner at a restaurant while on vacation.
2. Start savings now
Use time to your advantage, Rossman says. According to a Bankrate survey earlier this year, people expect to spend an average of $1,979, or a median $1,000, on their vacation.
“These sound like big numbers all at once,” Rossman says.
But spreading out these figures to save over a few months can make it easier. You’d have to sock away just $38 a week, for example, to come up with the nearly $2,000 average cost of a vacation.
Often when trying to reach savings goals, it’s better to have separate savings accounts so that you can better track your progress. It also will ensure that money meant for one purpose (saving for vacation, in this case) doesn’t get used for another.
Research shows that creating a separate savings account and naming it can be a real motivator, Rossman says.
“So, call it ‘Summer 2020 vacation,’” Rossman says. “Call it, ‘Hawaii 2020.’ Or wherever you want to go. That has a real psychological impact beyond account number 1234567.”
Make sure the savings account or money market account you use for your vacation fund is earning a competitive annual percentage yield (APY).
Also, instead of manually transferring the money to a savings account, you may want to automate your savings to keep your goal on target. You could do this by having a portion of your direct deposit, using a split deposit, deposited into a savings account each pay period. You should be able to do this through your employer. Or you may be able to set up a recurring transfer from your checking to your savings account through your bank.
3. Book your vacation well in advance
Stephanie Biegel, owner and founder at Lotus Travel Concierge, suggests booking your travel six months out.
“That will give us ample time to price watch the rate before final payment, but still be early enough to not be considered an ‘in demand’ fare,’” says Biegel, who is a member of the American Society of Travel Advisors (ASTA).
Most hotels, resorts and tour operators release early bird discounts to entice travelers to commit early, says Alvin Adriano, CEO of Travelwise International and ASTA member.
Additional amenities can include free breakfast, free Wi-Fi and spa treatments, Adriano says.
“Whatever the amenities they offer, it just gives you extra value in your pocket that you may or may not have thought about,” Adriano says. “Being proactive in our preparation can save you anywhere between 20 percent to 40 percent off, but most importantly you get exactly what you want.”
4. Strategically plan your airfare and when you travel
When planning your summer travel, there are certain ways that you can save by planning ahead.
Booking early can be the key to getting more for your money, especially during the high-traffic summer months, Adriano says.
Another way to plan your travel smart is by utilizing an airport hub where rates are more traveler-friendly, if possible.
“Finding major hubs locally and in your destination can save you a ton of money on airfare, simply by looking at an airport that might be a little (farther) away but still yield a discount gas and parking included,” Biegel says.
Biegel says the following airports/areas are some of the major airport hubs.
- Chicago O’Hare
- Houston (George Bush Intercontinental Airport)
- Los Angeles (LAX)
- Dallas/Fort Worth (DFW)
Location may change this, but in south Florida airfare to the Bahamas, Jamaica or Mexico price well, Biegel says.
In South Florida, Tuesday to Tuesday vacations have priced best. But Biegel says this isn’t the rule. The lesson here is that if your travel dates are flexible, you may be able to find a value trip.
Early June or late August, for example, may be a less-expensive time to travel since half of the country’s schools are off on vacation, but the other half are either starting or ending their school year, Biegel says.
5. Use a sign-up bonus to lower travel costs
It’s worth looking at credit card sign-up bonuses to see if these can help save you money. You’ll want to consider a few things when looking at these offers:
- Annual fee: Is this something you want to — or are able to — pay each year?
- Minimum spend requirement: Are you able to spend this amount and, more importantly, pay it off in full when it’s due?
- Ongoing perks of the credit card: Will this card have value in your wallet for the long-term future?
If you know you’re going to be spending a large amount, or more than you usually spend, putting that on a new credit card that’s going to give you a sign-up bonus may be an option worth pursuing. Getting a credit card in September could be perfect for someone trying to meet the spending requirements during the holiday season, Rossman says.
“Try to match up that spending period,” Rossman says. “Because you definitely don’t want to overspend. That’s a disaster, just in the sense that these average interest rates are close to 18 percent. You don’t want to be paying that. That’s going to defray the cost of your free trip.”
6. Allow time to receive sign-up bonus
Since you generally have to spend a certain amount of money during a certain timeframe to qualify for a credit card sign-up bonus, it pays to do this well before you plan to travel. This depends on how long it will take you to meet the spending requirement.
“Even once you get those points, then it might take another statement cycle to actually receive them,” Rossman says. “So now you could potentially be four months out already. And then when it comes to actually booking the trip, you want to make sure that you have enough notice to actually redeem those miles.”
One of the larger sign-up bonuses currently available is the Chase Sapphire Preferred credit card. That credit card has a 60,000 bonus points offer after you spend $4,000 in the first three months. Those points equal $750 toward airfare if you redeem them through Chase Ultimate Rewards.
With the average vacation costing roughly $2,000, $750 toward your vacation can help make saving for travel easier. Though there is a $95 annual fee on the Chase Sapphire Preferred credit card to consider.
The card also earns 2x the points on travel and dining and one point per dollar on your other purchases. So, using it on future travel can also earn you more points.
The Chase Sapphire Reserve offers 50,000 bonus points if you spend $4,000 on purchases within the first three months of account opening.
Chase Sapphire Reserve’s sign-up bonus is worth at least $750 toward travel.
“I say ‘at least’ because if you transfer you might even be able to get two, three cents per point,” Rossman says.
But the Chase Sapphire Reserve does have a $450 annual fee, though the $300 annual travel reimbursement credit makes this fee easier to handle.
The Capital One Venture Rewards Credit Card is a little bit more straightforward, since you earn two times miles per dollar on every purchase. The sign-up bonus is worth $500 toward travel, Rossman says. If you spend $3,000 within three months of your rewards membership enrollment date, you’ll earn $50,000 bonus miles to apply toward your travel.
On the Venture Rewards Card, the annual fee is waived during the first year and is then $95 going forward.
Growing your savings well before next summer, using a sign-up bonus to earn points toward travel with a new credit card and strategically planning your travel can help increase the odds of you traveling next summer — potentially at a lower cost.
The information about the Chase Sapphire Reserve card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.