Planning a vacation requires plenty of time, preparation…and money.

Still, it’s a hopeful outlet for many people, as their spending has shifted from material products to memorable experiences.

“Inflation and higher interest rates have dented consumer spending to some extent, but more on physical goods than experiences,” says Ted Rossman, industry analyst at Bankrate. “Travel, dining, concerts and sporting events have all been hot spending categories as we continue to move on from the pandemic,” Rossman adds.

If, however, your goal is to go on your long-sought dream vacation next summer, starting to save and plan now is a great first step. It’s easier to save smaller amounts consistently over time, plus you can likely take advantage of early-bird discounts on travel-related expenses.

Affordability is the most common reason people haven’t taken a vacation this year — 58 percent of those who didn’t said they couldn’t afford it, according to a recent Bankrate survey. But by setting aside money and organizing your trip now, your vacation next summer could possibly become a reality if you follow these eight 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, Rossman says.

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.

A budget can function as a reminder of your priorities and goals, too. As you build up a vacation fund, you may want to defer other large expenses.

“When you’re planning and budgeting for a big trip, you want to prioritize your plans,” says Andy Smith, CFP, executive director of financial planning at Edelman Financial Engines. “I recommend postponing any other ‘big-ticket’ items: The vacation usually is its own big-ticket item, so you might want to push other big-ticket purchases (like a new car) into another calendar year.”

2. Save consistently in smaller chunks

Use time to your advantage, Rossman says. The average cost of a vacation in the U.S. is about $1,984, according to data from Budget Your Trip.

“These sound like big numbers all at once,” Rossman says.

But saving $2,000 over 12 months is more manageable than, say, over three months. For example, it takes just $38 a week to save $2,000 in one year, compared with $167 a week over three months. (And this isn’t taking into account putting your money in a high-yielding savings account.)

Also, instead of manually transferring the money to a savings account, consider automating your savings to keep your goal consistently on target. You could do this by depositing a portion of your direct deposit, using a split deposit, into a savings account each pay period. Check with your employer to see if they offer this option. Or, you may be able to set up a recurring transfer from your checking to your savings account through your bank or a savings app.

3. Open a high-yield savings account

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. You could name it “Summer 2024 vacation,” for example. “Call it, ‘Hawaii 2024’ Or wherever you want to go. That has a real psychological impact beyond account number 1234567,” Rossman says.

Make sure the savings account or money market account you use for your vacation fund is earning a competitive annual percentage yield (APY). Many online banks offer high-yield savings accounts that are earning 5 percent APY or more.

Suppose you had $1,000 in savings dedicated to your vacation. In a traditional savings account with a low interest rate, you’d likely earn a couple dollars at maximum. In an account with a 5 percent APY, you could make $50 in free cash by the end of a year — more so if you contribute more money to the account during the year.

A certificate of deposit (CD) may also be worth considering for a vacation fund, so long as you can afford to lock away your money for a set period of time and are confident in your vacation timeline. CDs are less flexible than savings accounts and usually charge a fee for early withdrawal, but their appeal is that they earn a fixed APY until maturity. That means if you lock your money in a CD now, while rates are high, it will continue to earn that rate until the term is up.

4. Research prices well in advance

Though you may not need to purchase flights and accommodations right away, travel experts suggest planning your travel six to 12 months out, that way you have time to track prices and build savings.

“While planning ahead of time can pay off, booking flights 10 to 12 months out isn’t always the financially savvy move,” Smith says. “The cost of airfare changes all the time, and as a rule of thumb, start your search six to 12 months in advance.”

For domestic trips, purchasing flights 21 to 60 days before your departure is likely when you’ll find the best prices, while international travelers should research and book flights as early as possible, Smith adds.

In addition to airfare, booking accommodations well ahead of time can have significant perks. Most hotels, resorts and tour operators release early-bird discounts to entice travelers to commit early, says Alvin Adriano, CEO of Travelwise International.

By registering early, some hotels and resorts offer amenities such as free or discounted breakfast, Wi-Fi and spa treatments.

“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.”

5. Plan your flights and travel dates strategically

When planning your summer travel, there are ways you can save more with the help of additional lead time. One option is to fly out of an airport hub where rates are less costly.

Stephanie Biegel, owner and founder of Lotus Travel Concierge, says that booking flights at major hubs by your origin and 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.”

Major hubs have more flights arriving and departing, which means more options and more competitive prices. Plus, at a bigger hub, you’re likely to find a wider selection of airlines, including budget carriers.

For example, as of this writing, a person flying round-trip to London who’s based in Syracuse, N.Y., could save around $100 by flying out of John F. Kennedy International Airport in New York rather than Syracuse Hancock International Airport.

Biegel says the following airports/areas are some of the major airport hubs.

  • New York City-area
  • Chicago O’Hare
  • Atlanta
  • Denver
  • Houston (George Bush Intercontinental Airport)
  • Los Angeles (LAX)
  • Dallas/Fort Worth (DFW)
  • Miami
  • Orlando

The dates and times of your flight also matter. If you plan far ahead and your travel dates are flexible, you can elect flight times that are cheaper. Google Flights, for example, is one tool that shows you how much airfare costs for different dates.

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.

6. 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 rewards 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.”

Average interest rates are over 20 percent, which can significantly eat into your budget. “You don’t want to be paying that,” Rossman adds. “That’s going to defray the cost of your free trip.”

Make sure to research and compare multiple sign-up bonuses available. Read the terms to make sure you can qualify for the bonus — often, you need to spend a certain amount of money during a certain time-frame to qualify.

7. Take advantage of holiday deals

Sale events such as Black Friday, Cyber Monday and New Year promotions aren’t limited to traditional retail sectors — the travel industry participates in them, too.

Before the holiday seasons kick in, it’s important for travelers to have a clear idea of where they want to go and what they’re looking to book. Sites such as Kayak and Hopper allow you to set up price alerts for specific destinations and dates. As soon as there’s a drop in prices — which often happens during holiday sales — you’ll receive instant notifications so you don’t miss out on limited-time offers.

Not all deals promoted around holidays are genuine bargains. Sometimes companies inflate prices before the sale, making the discounted price seem more appealing.

To make sure you’re truly getting a deal, look into a more extensive price history or research average prices a few months in advance, so you have a benchmark to compare against when the sales roll out.

8. Start thinking about currency exchange

When planning for an international trip, many travelers think about flights and accommodations, but often overlook an important detail: Currency exchange. Creating a plan for how and when you’ll exchange currency can ensure you get the best rates and avoid last-minute hassles.

Look into travel credit cards, if you don’t have one already. Sign-up bonuses aren’t the only advantage these offer.

“A credit card is often going to be your cheapest foreign exchange method,” says Bankrate’s Rossman. “Pay on time and in full if at all possible, to avoid interest. And look for a credit card without foreign transaction fees. If given the choice, it’s usually better to pay in the local currency and have your credit card network handle the exchange rate.”

Credit cards aren’t accepted everywhere, though, so it’s important to consider how you’ll exchange cash, too. Exchange rates fluctuate daily — by monitoring them ahead of time, you can exchange your money when rates are in your favor.

If you wait too long to exchange currency, you may end up having to do so at an airport or tourist hub, which typically charge much higher fees. Researching and exchanging money at reputed banks or online platforms beforehand can help you avoid those high fees.

Bottom line

Even if you don’t have that much to contribute to a vacation fund now, what’s important is building those savings early and regularly. With an established budget and advanced planning, you can ensure that you’ll have a cushion of time to save enough and stress less about paying for that vacation when next summer comes around.

“Travel isn’t quite as expensive now as it was a few months ago, gas supply catches up to demand,” Rossman says, “but airfares and hotel costs are still considerably higher than they were prior to the pandemic. I think prices could remain elevated for the foreseeable future. Book early, be flexible and take advantage of rewards points and miles if you can.”