Vacations aren’t cheap — here are some tips on growing your funds for summer fun
Between the cost of flights, rental cars, meals, luggage, new outfits, hotels, and so on, saving for a summer vacation can be daunting.
Whether you’re traveling within the US for the summer or overseas, we have some hot-saving tips that could make it easier to tuck cash away for your getaway.
1. Make a plan
It’s easy to say you’ll make a plan to save for a summer vacation, but we all know it’s harder to follow through. My advice for sticking to a summer savings plan comes down to two things:
- Make your plan actionable.
- Make your savings contributions automatic.
When I say actionable, I mean don’t make a loose plan to save $2,000 before your vacation — you have to include how much you have to save each week or month to achieve that goal within a specific time frame.
For example, you could make the savings plan “Save $50 every week for five months,” which yields $1,000.
The automatic part of your plan can involve setting up weekly or monthly ACH transfers, or a portion of your paycheck, to be sent to your savings automatically. This way, you don’t have to make those transfers manually, you won’t forget to save and you can relieve some stress.
2. Open a high-yield savings account
Regardless of your vacation destination, it’s smart to put your money in a savings account that can grow your balance passively. High-interest savings accounts work the same as regular savings accounts — they just have a much higher interest rate, often at least 4% APY.
With a high-yield savings account, your vacation savings balance can grow over time without you having to do anything but leave the cash alone. However, watch out for accounts with balance requirements or monthly fees.
3. Save your change digitally
Saving your change from cash purchases is an easy way to store cash for a summer vacay, but with debit cards and contactless payments, it’s not as easy anymore.
Instead of saving physical spare change, consider accounts with a round-up feature, such as SoFi, Bank of America, Ally Bank and Chime. When enabled, your debit card purchases are rounded up to the nearest dollar (or amount you set), and the “change” is automatically sent to your savings account or account of your choice.
It’s an easy way to save while you spend, and the amounts are small, so it shouldn’t put too big a dent in your budget.
4. Certificates of deposit
Certificates of deposit (CDs) are handy deposit accounts that are kind of like locked savings accounts. You open one with an initial deposit and earn a fixed interest rate on your funds over the CD’s term. You can’t spend the funds like a checking account, and your deposit and earned interest are released to you at the end of the CD’s term.
CDs are a safe and secure way to save money passively. If you know when you’re going on vacation this summer, or anytime in the near future, you can open a CD to mature right before the vacation date. CD terms can range from three months to 10 years, so you have a lot of flexibility on maturity date.
And a big plus, CDs earn higher interest rates on average than savings accounts, too.
5. Consider cutting at least one non-essential expense
If you can cut out at least one non-essential bill, that could help you save a little more before your summer getaway. Look through subscription services and temporarily pause the ones you don’t use, cut back on takeout or food delivery and stop eating avocado toast (just kidding).
For example, if you cancel Netflix for just six months, you could save around $48 to $150, depending on the plan. This cash isn’t nothing, and you can put the money you would have spent on any non-essentials toward your summer funds. The more non-essentials you can live without for a few months, the more you can save.
Bottom line
Saving for a summer vacation can feel overwhelming, and your wallet might be cringing as you explore summer destinations. However, with a little preparation, planning and careful spending, you can make it happen.
Remember: make your savings plan actionable, consider a high-yield account for maximum interest earnings on your funds, and every little bit helps.
