Friday, June 23rd, 2017

The First Step in Saving Money for Travel

I’ve been receiving lots of inquiries from readers asking how they can travel long-term.  To each reader, I say the same thing: it starts with building up your savings.  Even if you have no idea when or where you want to travel, start the savings now — you’ll have a head start when you decide what you want to do!

Here are the steps to saving enough travel money for your dream trip:

  1. Take Care of Your Debt

Paying off any high-interest debt is absolutely vital before you travel.  If you carry any high interest debt, like a credit card balance, car payments, or high interest student loans, proceed to steps 3 and 4 and use the extra cash to pay these balances off first.

Keep in mind that not all debt is bad.  Student debt is often at a low enough rate that you can budget your monthly loan payments into your travels.

  1. Open a Travel Account

Open a back account that’s exclusively for your travel savings.  Use a bank that doesn’t charge you monthly fees.  (If this were another time, I’d recommend opening a high interest savings account, but those are few and far between these days.  An account that doesn’t charge you should be enough.)

  1. Figure Out Your Expenses

Go through your monthly expenses and find out what your essential costs are.  The bare essentials: rent, food, utilities, transportation.

After that, add up your less essentials: gym membership, Netflix, cable, whatever you need to keep you sane, whether it’s yoga classes or a weekly movie.  Don’t even think of adding an alcohol budget.

With the lesser essentials, keep some and eliminate others.  That will free up more space in your budget.

  1. Save the Difference

Add up your essential monthly expenses.  Add on £100-200 for incidental expenses.  Subtract it from the total you get paid each month — and the moment your paycheck goes into your account, immediately transfer the difference to your travel savings account.

Now, here’s the important part — don’t touch that travel account!  Train yourself to live on the amount you’ve allotted yourself.

If you follow these steps, you will be saving money at a far faster than you ever imagined.  And what does that mean?  You’ll get to travel sooner, or for longer.  And that can make a world of difference.

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