7 Easy steps to build your travel fund this year

Traveling as a Canadian can be a luxurious escape in today’s economy, but it’s not a reason to hit the brakes. However, being savvy about it is key, and one effective strategy is to build a dedicated travel fund.

The truth about travel is that it often brings financial stress. Saving money becomes challenging amidst numerous expenses and competing priorities. While planning a budget-friendly trip is advisable, it doesn’t negate the need for an initial investment.

I am planning a trip at the moment that I anticipate will be quite expensive, but it is a bucket list trip for me and I’ve given myself a year and a half to sort out my finances. With the new year and the new resolutions, I thought it would be the best time to start.

So I’m about to share with you some of the steps I will take to achieve my goal but if you have more tips, let me know in the comments below!

How to build a travel fund?

What is your plan to build your travel fund?

This is simple common sense, but to build a travel fund, you need a plan.

It is a lot easier to succeed when you have clearly defined your objectives. Your plan must be SMART. What is a SMART plan? It’s Specific, Measurable, Achievable, Relevant, and Time-bound.

SSave enough to travel to Tanzania.
MSave 15k to travel to Tanzania.
ASave 10k to 15k to travel to Tanzania.
RSave 10k to 15k to travel to Tanzania, so that I can accomplish the long-time dream I have to hike Kilimanjaro.
TSave 10k to 15k, in 18 months, to travel to Tanzania, so that I can accomplish the long-time dream I have to hike Kilimanjaro.

You have to do minimal research to find out how much you need to fund your travel. Account for transportation, accommodation, food, entertainment, activities, tours, shopping, clothing, souvenirs, medical expenses, and some emergency money if things go south.

It’s important to also look for off-season opportunities that could help you lower the cost, but as a general rule, you want to have extra money rather than having to rely on your credit card.

Create a new savings account for your travel fund.

Because saving can be quite challenging, it’s crucial to set up a dedicated account specifically for your travel fund. The idea is to have a separate space where you can easily monitor your balance and track your funds without unrestricted access.

This dedicated account offers the added benefit of providing a clear view of your budget, allowing for more effective planning. For instance, if you anticipate extra income, you might choose to bump up your savings for that period. Conversely, during tighter months, you can decide to take a breather from contributing to the travel fund.

Remember, this account should serve a single purpose—to save money or spend on travel. Keeping it exclusive to your travel goals enhances your ability to stay focused and disciplined in reaching your financial objectives for that dream trip.

Automate your savings

I’ve read somewhere that wealthy people make it a habit to pay themselves first before attending to other financial matters. I began adopting this approach last year when building my emergency fund, and to my surprise, it works!

I set up my account to automatically transfer a specific amount from my checking account to my savings account with every paycheck.

I prefer not to dwell on the process or handle it manually. The goal is to make it effortlessly easy, leaving myself with no excuse not to do it.

Cut your expenses

We reside in a consumption-driven society, often spending copious amounts on frivolous things. It’s imperative to shift focus and streamline our expenses.

Take a moment to review your last three statements and assess where your money is going. What do you genuinely use and need? Can you find more cost-effective alternatives or better services? Evaluate the amount spent on interest or bank fees—can these be reduced or eliminated?

Examine all your expenditures and strive to cut costs. I must confess, during my own account analysis, I discovered I was paying around $500 per month for unused services, and services that overcharged me, along with banking fees and credit card interest. Additionally, I was spending at least $300 on fast food and restaurants.

Overspending significantly hampers your ability to save.

I made a few posts about things I have stopped purchasing to save money. Making savings a priority is crucial.

Consider incorporating a no-spend challenge once or twice a year to reset your spending habits and boost your savings.

Increase your income

The primary method to save more money, apart from cutting expenses, is to increase your income.

You can negotiate a raise at your current job or, like myself, explore opportunities with better salaries. Alternatively, consider a side hustle during your free time.

For instance, I work a 9-to-5 job as an accountant to sustain my life. On the side, I consult for various clients, aiding them in launching their businesses, and I generate additional income through my blog. Profits from the blog are reinvested, while consulting income contributes to various funds, such as the travel fund.

If you have a skill you can capitalize on, capitalize on it. There are plenty of jobs you can do from the comfort of your home with a flexible schedule allowing you to work whenever you can.

I’ve taken on additional roles in stores or restaurants when extra income was needed. I’ve participated in online surveys, and written reviews, engaged in cold calling, sold digital products, and ventured into different businesses. The possibilities are endless; you just need to stay laser-focused on your goals and what you aim to achieve.

Extra ways to grow your travel fund

Apply for a new credit card with a travel benefit

We obviously can’t eliminate every expense. So, if spending is inevitable, consider using a credit card with travel benefits. While credit cards aren’t technically a travel fund, they can significantly contribute to funding your trips and help you spend less of your own money. You’re missing out if you’re not earning points or cash back on your spending.

Many cards offer perks such as reduced airfare, discounts on accommodations and car rentals. Some even provide travel insurance and access to lounges, adding a touch of luxury to your budget-friendly travel experience.

Applying for a new card can earn you bonus points, translating to real money—up to $500—toward your travels. Before applying for a new credit card, conduct thorough research to find the one with the best offers and promotions.

High-yield savings account

To grow your travel savings, you have to make your money work for you. As mentioned earlier, set up a dedicated savings account. Choose a bank that offers a high-yield interest rate. While the initial returns might not be substantial, as your account grows to $5k or more, the accrued interest becomes increasingly noteworthy.

The longer you keep your money invested and consistently contribute each month, the more attractive the interest earnings become. Additionally, remember that you earn interest on your accumulated interest, leading to a compounding effect that steadily grows your savings.

Like my mother always said, nothing good in life will come easy. And there is nothing better in life than to travel. You have to start somewhere, whether you save 20$ or 100$, it’s that initial step that is hard, the rest will come eventually! Make a plan, try to follow it, and save as much as possible.

I realized that saving is a habit like any other habit. Once you start and you get yourself used to it, it becomes easier and easier.

Let me know in the comments below how you go about saving for your trips, I would love to discuss it more!

Until next time,

Sofyah,

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SofyahOv

Sofyah Ov is the founder of Sofyahscorner. Through her travels, she emphasizes the art of living comfortably while adventuring, showing readers how to strike a harmonious balance between world exploration and the soft life. Having lived in 3 different continents, the writer, passionate traveler, and lifestyle enthusiast would love to teach you how you can have it all!

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