It was a roller coaster of emotions for travelers this week, as a website glitch over at United.com allowed users to purchase nearly free flights for a limited amount of time on Monday. Unfortunately, things that seem too good to be true usually are; United discovered the error relatively quickly and reneged the amazing deals. Frequent fliers were again left to their own devices to find affordable airfare. That’s the trouble with travel… it isn’t free.
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Luckily, though, we’re here to help. It only takes a few simple steps to set up a savings plan that will help fulfill your travel needs. Here are some tips on how to make saving for travel easier and more rewarding.
Make saving for travel a fixed expense
You don’t skimp on your rent or electric bill, right? Well if travel is truly one of your priorities, you shouldn’t skimp on travel either. Why not budget a monthly amount to put aside specifically for your getaways?
An easy way to do this is by opening a new savings account dedicated specifically to travel. Contributing to this account on a regular schedule will help supply you with a sturdy travel fund for your next vacation. As with any savings venture, though, the discipline here is the hardest part. One way to circumvent the temptation of spending on today’s latte what you should be saving for tomorrow’s vacation is to set up automatic deposits from your paycheck into your “Travel” savings account*. If you never see it, you’re less likely to spend it. Even contributing an amount as low as $50 per paycheck would accumulate to roughly $1200 a year. Now you’re going places.
*Most payroll systems allow you to elect multiple accounts as destinations for your earnings. Having your paycheck divided amongst two accounts, or more, is usually as simple as filling out a request form online.
Remember, not all savings accounts were created equal. Sites such as bankrate.com aggregate the interest rates offered by a number of banks, enabling you to search for a bank offering the highest rate. More often than not, the banks we use for our everyday transactions do not offer the most interest, so doing a bit of research is usually worth your while.
Spending with credit cards is a little like playing with fire- used with discipline, fire is a beneficial tool that can cook you a delicious meal, but if allowed to lose control it can cause a lot of damage. The goal here is to use (similarly dangerous) credit cards responsibly, leveraging their use for travel rewards, but avoiding the peril of their high interest rates. That way you can afford stay in resorts where delicious meals are cooked for you.
Credit cards love to offer travel rewards, and their benefits span everything from airlines to hotels to car rental services. The key here is to find a card that offers the best benefits for you. Choosing a card with rewards that replace expenses you already make will get you the most bang for your buck.
Travel internationally often? Sign up for the Barclaycard World MasterCard, which has no foreign transaction fees. Refuse to fly without a television in your seat? Check out Jet Blue’s official card. Vacation exclusively at Walt Disney World? The Magic Kingdom got deals for you too. Like Polonius said, “To thine own self be true.” (Remember, Polonius said that…not Hamlet). But once again, don’t use this as an excuse to sign up for a million credit cards, ok? Choose one that suits you best, and pay off the balance every month.
Invest Short Term
Some of us travel regularly, and therefore require our travel funds to be highly liquid (hence the savings account suggestion above.) But perhaps you’re saving for one vacation extravaganza in particular… a Honeymoon, a Sabbatical, or a recent grad’s Backpacking Trek through Europe?
In the case that you are saving for a particular event, and therefore have a defined timetable, it might be a good idea to explore some short term investments. Both Certificates of Deposit and Treasuries offer fixed rates of return in exchange for leaving your investment within the account until an agreed upon date of maturity.
The key here is having confidence that you won’t need to access the funds before they mature, otherwise you’ll incur a penalty. This is difficult if you’re the type to jet away for the weekend on a moment’s notice. But if you know your Honeymoon is 18 months away, and you want it to be awesome, a short term investment could be the way to go.
Above all, the key to saving for travel is the same as saving for any other expense- planning ahead. Take the simple step of putting aside travel funds regularly, or choose a credit card that earns you beneficial rewards. Start saving today, and you’ll thank yourself tomorrow…when you’re laying on the beach with your toes in the sand. Your travel might not be free, but it will be easier to afford.