Almost everyone dreams about travelling to places they’ve never seen and experiencing cultures and customs different than their own. However, travel can often be costly, making bucket list destinations seem unattainable.
Whether your dream is to go backpacking in Latin America or experience romantic Paris from the comfort of a beautiful hotel suite, you can make it happen by making small changes to your spending and saving habits. Here are six easy ways to save money for travel that can be done on any budget and don’t require you to find ways to increase your income.
Outline a simple budget
The first step to effectively saving money for travel is to create a budget. This tip requires a little more work than the others, but it’s necessary that you develop a clear understanding of where your money is going. If you have recently invested in fractional shares, with somewhere like SoFi (see here for more information), you will know that some of your money is going toward that, as well as receiving more at the same time. Or your money could be going toward your bills. But the real problem comes when you don’t know where your money is going. By seeing exactly how much money you spend each month on both necessities and luxury items, you can start to figure out if one area is getting more of your hard-earned money than it should.
If you’re not sure where to start, divide your spending using the 50-30-20 rule. According to this classic budgeting principle, approximately 50% of your after-tax income should go towards needs, 30% towards wants, and 20% towards savings for your future. Your needs include housing costs, transportation, medical insurance, groceries, and bills. Wants include things like entertainment, eating out, and hobbies. This is also where your savings for your travel plans should go. The savings category should be reserved for retirement, your emergency fund, and paying off debt.
Once you’ve calculated how much you’re actually spending on each of these categories, reflect on your results. Are you spending too much on wants? If so, look to see which habits are the culprits. If you dine out at restaurants three nights per week, try cutting that down to one per week. If you’re spending too much on housing, can you move somewhere that’s a little more affordable?
Reduce your utility bill
Now that you’ve establishedwhere your money is going, you’ve probably realized that the category with the least wiggle room is your needs. Depending on where you live, cost of living may be extremely high, taking finding a smaller, more affordable place off the table. You might also have a large family that needs a sizable home to live comfortably.
Fortunately, there are still ways you may be able to bring down the cost of some of your bills. Lowering your utility costs is one of the easiest ways to do this. Set your thermostat to a lower temperature at night and when you’re not likely to be home. Bumping the temperature down even a single degree will also make a considerable difference over time. To save on electricity, unplug devices when you’re not using them. It’s also worth shopping around for energy providers; you may be able to negotiate a better deal for yourself.
While the 50-30-20 rule is a great place to start, it can be modified to suit your needs. You might find that what actually works better for you is spending 55% on needs and 25% on wants. Though you can play around a bit with the wants and needs categories, try not to come down from the 20% you should be diverting to your savings.
Food shop smarter
Grocery shopping often seems like another area where you can’t bring down your costs, but you’d be surprised how many little changes you can make to reduce that bill. Stick to buying produce that is in season and plan your meals around the items are on sale at the store each week. Keep an eye on pricier items such as coffee and toilet paper and stock up when they go on sale rather than waiting until supplies get low.
There are also tons of great budget recipe websites out there that break down the cost of meals by serving. Seeing exactly how much a home-cooked meal costs compared to dinner at your favourite restaurant is particularly motivating. It’s also a good strategy to plan your weekly meals around similar ingredients. If you need half a head of broccoli for one meal, look for another recipe you can make that will use up the other half. This eliminates wasting food you’ve spent your hard-earned money on.
Buy second hand
After you’ve modified your spending on your needs, it’s time to cut your spending on your wants. Before purchasing anything new, ask yourself if you could buy it pre-owned or second hand.
If your mobile phone is a few years old and you’re set on replacing it with a newer model, see if your phone provider offers pre-owned or ‘open box’ devices for less. Try to stay away from contracts that require you to put down very little money upfront, as you’ll end up spending considerably more on a monthly plan.
Some other items that should be purchased second hand include:
- Clothing. If you’re into high-end brands, you can get pieces that look new or even still have tags for a fraction of the original price.
- Books. Save paper and money at the same time.
- Vehicles and bicycles. Avoid spending money on high ticket items that will only depreciate. A car that’s only a few years old will save you thousands.
- Furniture. Antiques can easily be sanded, stained, and reupholstered to give you a low-cost bespoke piece.
Use cashback sites and voucher codes for your purchases
While buying second hand is a great strategy, it doesn’t work for all items. With some savvy shopping, you can save on brand new items as well. Keep your eye on items you’re interested in and watch for markdowns. If it sells out before it goes on sale, there will be plenty of opportunities to find similar items in the future. Don’t get into the trap of thinking you have to have this one specific item.
You can also sign up to cashback and voucher websites such as Net Voucher Codes. Accounts for these types of sites are often free and by making a purchase through them, you’ll get exclusive discounts. However, there is usually a minimum spend required, which can encourage you to spend more than you had planned to in the first place. For this reason, limit use of these sites for big purchases like appliances and electronics.
Set up automatic transfers
In the final step, you’ll want to make sure you’re diverting 20% of your income towards essential savings such as retirement plans. Whatever you have left can be placed in a short term savings account for purchases like down payments on a house, and of course your future travel plans.
Saving more is easier said than done. Exercising self-discipline can be difficult, especially when you first attempt to change your spending habits. To make the process easier on yourself, set up recurring automatic transfers as soon as your paycheck is deposited. You might find out that, by sticking to your budget, you can move $500 a month to your retirement savings account and $300 a month to your short term savings account for travel. By automizing this process, you won’t even have the opportunity to decide if you should put away less this month to buy that fancy pair of shoes. You’re less likely to withdraw money from those accounts than you are to prevent moving money there in the first place.
At the end of the day, it all comes down to deciding what your priorities are in your life. If that travel experience on your bucket list is worth it, you’ll do what you can to make it financially viable.