How to Budget and Save Money for Vacation: 5 Steps to Get Started

People often think that you need to have a lot of money in order to travel, but that’s not actually true.  The key is getting a handle on your household finances and knowing how to budget so that you can save for travel.  Then, it’s about prioritizing a plan for saving up for your next trip and focusing on making it happen. 

People tell me all the time how much they would love to see the world or take their family on a vacation, but they don’t.  That’s because they say they want to travel, but they don’t actually make saving for travel a financial priority.  In fact, we’re caught up in a world where saving isn’t as fun as spending — and we’re encouraged to spend all the time.

Empower Yourself to Save Money for a Trip!

But there’s some empowering about controlling your money. Not only learning how to budget and spend wisely but controlling your savings so that you can actually do all those things you want to do. Such as taking your family on that awesome vacation!

Everyone has different financial situations, but I firmly believe that the saying is true:  “if there is a will, there is a way.”

couple standing in front of Chichen Itza pyramid in Mexico. Saving money to enjoy this trip!
We made it to Chcihen Itza!

My parents are a perfect example. When I was young, we were hardly “rich” yet we went EVERYWHERE! From Disney, cruises to the Bahamas, Mexico, New York and Hawaii.  They showed me that it’s possible if you have your priorities straight. For Josh and I, travel is an important part of our lives.  So we have chosen to build our lifestyle around our passion in order to make travel a financial priority.

This means that we have learned how to budget our money and we have agreed on certain lifestyle preferences that allow us to be able to save more money for vacations and other fun things we want to do. 

To help you get started, here are some of our best pieces of advice as well as tools that we use to help us maintain control of our budget and allow us to be able to save up money for travel!

How to Budget and Save for a Trip! Read the Blog or Watch the Video Below

You may read the full blog post below, or watch the video for the same tips + a tutorial on how to use our Budgeting & Vacation Saving Excel Template (free for you to download).

1. Build a Realistic Living Budget

I hate to use that ugly word “budget,” but it lays the groundwork for everything.  There’s no way around it, you must know how much money you bring in and how much is going out on a regular basis.  You don’t have to document every penny like an accountant, but taking the time to get a handle on it is critical.

You can use tools such as bank statements and reports, financial software (like Quicken), or just good ol’ Microsoft Excel.  Find out what works best for you.  For us, we actually use an Excel budget template that I built which is suited to our family’s needs. 

  • I update my Excel Budget Spreadsheet at the beginning of each month
  • I use estimated budget numbers to calculate anticipated spending and saving
  • When we get paid, I immediately put that money aside into savings accounts (pay yourself first, as they say)
  • Then as bills our paid each month, I update the spreadsheet to reflect actual spending numbers
  • This helps me to see if there is a discrepancy — if I’m under or over budgeting!
  • Finally, I try to make adjustments if possible for the next month

** Download a copy of our FREE Budgeting & Vacation Saving Excel Template HERE!

Excel budget template sample to save for a trip - download a copy free

Our budgeting Excel spreadsheet is structured into categories:  Fixed Expenses, Variable Expenses, and multiple savings accounts.

Fixed expenses are things that will always need to be paid each month, such as rent, school loans, insurance, car payments, etc. Variable expenses include things like groceries, gasoline, dining out, shopping, and misc. fun. While you will always have variable spending, these are things that can be adjusted, if necessary.

Monthly Income – Fixed – Variable = Money Left Over for Saving

Overall, the idea is that if you take your regular monthly income (after taxes) and then subtract your monthly fixed and variable expenses, then you are left with how much money you can save.  

2. Analyze Your Savings (or Lack Thereof)

After you subtract your fixed and variable expenses, you should have money left for savings.  If you don’t, then you have a bigger issue and probably shouldn’t be spending money on travel right now.  In this case, you may need to take a harder look at your lifestyle and see if there are any expenses that you can reduce or eliminate.  You can also try to make more income. However, that’s not always possible for some people. So in many cases, you might just need to focus on expenses. 

The ONLY way to save more money is to increase your income (not always possible) or find ways to reduce your expenses.

If you really want to save more money for travel, then you are going to have to analyze your savings and find a way to squeeze out more savings.  Being able to tackle this really will help give you more money to work with that you can save for vacation. We can’t really move onto the next steps of saving if you have no savings.  So focusing here first gets you on your way!

couple sitting on rock looking out at arches national park. Saved money to enjoy this trip with no worries.

When it comes to your savings, you should have multiple buckets (or savings accounts) to put your money in:

  • Emergency fund = our financial advisor recommends that we should have at least 6 months worth to cover your fixed & variable expenses in case of an emergency situation
  • Long term savings = includes retirement or investment accounts
  • Other savings = big purchases, such as a house or car
  • Travel savings = This is our additional recommendation!  Because this will help you focus on your efforts on saving for a trip!

These financial tips will help you achieve stability regardless of travel.  But building travel into this plan will help you achieve your goals of traveling without disrupting your financial well being.  

Can I Just Use a Credit Card to Pay for Travel and Earn Points?

While there are a number of great travel credit cards on the market, we don’t ever recommend spending money you don’t already have!  It’s true that we do use travel credit cards to pay for trips and we have been able to earn tons of points over the years. In fact, we’ve earned 10’s of thousands of dollars in travel points by “travel hacking” with various travel credit cards and points.

However, this is honestly an advanced technique that should only be done if you already have money saved up and the discipline to save money and not overspend. We always immediately pay our credit cards off, and we never put something on a credit card unless we already have the money in the bank to cover the expense. 

In short, we always recommend that you save up the money FIRST before you spend it on a vacation. 

3. Set Up a Travel Only Bank Account (Savings & Checking)

Once you have a handle on your monthly budget and savings, then you should set up a travel only bank account.  We recommend using a completely different bank from your daily spending because it helps keep you from dipping into it (out of sight, out of mind). Then each month when we get paid, I calculate how much savings we should have for the money and I transfer that money into that vacation savings account right away. I like to take it out of our primary bank account as soon as possible so that we don’t accidentally spend it. 

This system works great for us!  We build up money in this travel bank account and then when we are ready to take a trip, we know exactly how much we have to spend!  So in this way, having a separate travel bank account also helps us with our budgeting for a trip. And since all of our bills are already paid first out of our primary bank accounts, we don’t worry about spending the money! 

Saving money so we don't have to worry and Josh can enjoy this breakfast view from Ballachulish Hotel Restaurant over Loch Leven
Breakfast View from Ballachulish Hotel Restaurant over Loch Leven, Scottish Highlands

Travel can get expensive, and you may feel guilty about spending thousands on a vacation.  That’s why having a separate bank account for vacations helps you by designating this money for travel purposes.  And since everything else is taken care of, you should feel never feel guilty about spending it; that’s what it’s there for! 

I can’t tell you how nice it feels when you are on vacation to just be able to enjoy yourself spending money and not worrying about it — because that’s what it’s there for! It’s kinda freeing!

Another reason we use a completely separate bank account for our travel savings is that it’s always good to have backup banks and different ATM cards when you travel.  This is actually one of our biggest money travel tips that we share without community. Because sometimes emergencies happen.  Sometimes a bank might think a charge is fraudulent if you are overseas and lock your account. Other times, maybe your ATM card just doesn’t seem to be working. So it’s always good to have multiple backup options, and that’s why we have our travel bank account at a different bank than our everyday bank accounts. 

4. Prioritize Your Saving / Spending to Build Your Vacation Bank Account Balance

While we can’t always control everything about our finances and everyone’s situation is different, the one area that each of us can focus in on and have an impact is HOW we choose to spend and save our money. This is the area where you have the most control.  If you really want to see the world or take your family on a memorable vacation, then you need to make it a priority in your budget. 

Years ago I remember stumbling across a really great concept when it comes to talking about money and empowering yourself.  When we use words like “can’t afford” it puts a negative message out to the world (and ourselves). However, if you spin that phrase and instead say “I choose not to spend my money on this” then it’s a more positive way of thinking and actually feels empowering!  

Shift Your Mindset to Prioritize Saving for a Trip!

So when it comes to saving up for travel, it’s important for you to shift your mindset.  No one has a money-tree growing in their backyard. And few of us are independently wealthy have unlimited money flowing into our bank accounts.  So it’s really about taking control of our finances and making the decision to spend and save how we want!  And if you want to save up for travel, by golly go for it!  

Since everyone’s financial situation is different, choices need to be made. This is where having that “variable expense” category in your budget can help.  These are things you can try to cut back on, things like shopping or dining out.

Ultimately, it comes down to wants versus needs; and the lifestyle that you value.  And for us, we value travel as a really important part of our life. So we make it a point to build saving for trips into our household budget — and that has allowed us to build up our vacation account enough to go on some pretty amazing adventures around the world over the years!

liz exploring shawan village in china with people on streets, shops and red lanterns hanging from trees

Tips to Cut Back on Spending Money

When it comes to cutting back on spending so you have more money to save for a trip, we have a few tricks that we’ve learned over the years which really helps us.  For example, Josh and I rarely ever go shopping. In fact, I actually don’t like shopping at all — and I don’t like accumulating a lot of stuff or having clutter around the house.  We only go to the store when we truly need something. 

Also, we completely avoid shopping at places like Wal-Mart; where they tempt people with “deals” that coax people into buying stuff they don’t really need.  We also make shopping lists when we go to the store, not just for groceries – but for everything! 

Overall, we’ve decided that we don’t care to spend money on things around the house because we would rather go on trips.  

Also, we try to find ways to save money on groceries by making enough dinner so there are usually leftovers the next day for lunch.  We also look for creative ways to save on things that are expensive at the store.  For example, granola is crazy expensive!  But we actually buy the ingredients in bulk and make our own granola at home!  It’s super tasty and makes the house smell so good. 

In the morning rather than going to Starbucks, we actually have to-go cups to bring with us and we do splurge a bit on good coffee and creamer at home (usually again, buying value sizes) so we can have really yummy coffee every day on the way to the office for a fraction of the price. 

But those are our decisions, everyone is different. So you just need to find what works best for you and your family!

5. Set Travel Goals

As with anything in life, setting goals puts you on a path to achieving it. Having a dollar amount you are shooting for in your travel bank account or having a destination and travel date set in your mind really helps give you something tangible to work towards.  You will be surprised at how quickly setting a travel goal will take it from just a dream to a reality.  Before you know it, that travel bank account will really be growing!

Setting a target date for your trip will also help you visualize it actually happening, and will help you to make those prioritizing decisions to save even quicker.  So write it on your calendar, and plan for the time off of work; this will make it seem real.  That way when you are out at the store and you see that item on sale that you are tempted to buy, you can think “hmmm…these new pair of shoes, or tickets to that Broadway show in NYC this Fall?”

Saving money for travel allows us to sit here in front of the Sydney Opera House and bridge in Australia on a dream vacation!

Perhaps you want to take a trip to Europe next year, or take the family to Disneyland.  Do some research to find out about how much that trip will cost, then start working toward it!  For example, when Josh and I knew we would be going to Asia last January, we were super strict about our budget during the months leading up to the trip.

We hardly had any variable spending during these months, and we didn’t feel deprived because we were so excited for the upcoming trip!

posing with dancers in cambodia thanks to our budget and saving for the trip
Our Visit to Cambodia

Learning How to Budget Allows You to Save Money for a Trip!

Overall if you really want to see the world or take your family on a memorable vacation, then do it!  For most of us, there really is no excuse.  It’s just a matter of setting your priorities accordingly and actually making it a point to work towards it.  Most of us don’t have the luxury of unlimited income, so being diligent about your spending and savings will help you achieve your goals faster than you could have imagined.

Before you know it, you will have your travel account built up and you will be off on amazing adventures.  Happy travels!


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7 thoughts on “How to Budget and Save Money for Vacation: 5 Steps to Get Started”

  1. Yes, a separate bank account helps. We have checking and two savings. It helps to not spend money on things like big TVs, eating out at crappy chain restaurants, bring your lunch to work, don’t stop at Starbucks every day, don’t have two expensive car payments; the list goes on and on. It’s too easy to waste money in the U.S.

    1. Thanks! yeah, it really helps us – it’s way too easy to waste money! We have made it a point to cut back on shopping in general, and we don’t miss all that “stuff” – in fact, we don’t really like having a lot of stuff. Then you just have to spend time and money trying to organize it, or maintain / clean it. Just costs more time and more money to have a lot of stuff. We would much rather spend that money traveling 🙂

      Hope all is well Lance!
      Liz & josh

  2. Wow, sounds like you guys have it all figured out! I agree with building saving into your lifestyle, I find that’s the only effective way to save. Budgets don’t work for me, though; I’m too disorganised for them. I’d forget to note some expenses and eventually give it up altogether. Instead, I automatically save a portion of my income in a separate account and spend whatever is left.

    1. Thanks Deia! We agree with you – we are not accountants for a good reason, we are not that detailed either. We actually move money to our travel & savings accounts first too (to make sure it gets there). What’s important is that you put it aside so you can enjoy it.

      What’s great is that once you have the travel account built up, you can spend it however you want! All the fun stuff! 🙂

      Happy travels!
      Liz & Josh

  3. Hi Liz and Josh,
    Great outline of how to save money for travel. Thanks for this. People always have questions about how we travel and how we saved. You covered a lot. We made a budget, set goals, and took up any extra work we could get. One of the keys for us was living below our means. Not sure why people need such extravagance. During the last 15th months we’ve been sharing a cell phone, not paying for water, eating lots of local fruit, and cutting costs in other ways. The stuff we did on the road is stuff we did before we hit the road. A lot of them are applicable.

    Even if ya’ll aint accountants it’s easy enough to not spend what you don’t earn or to not spend more than you have. This is such an illness in our society today. We’ve found tons of apps to help us with this. Do you guys use anything to track your expenses?

    Keep on journeying! Love the blog.

    Mark and Camille

    1. LOL – thanks again for reading Mark, and for a great comment!

      We don’t use anything special to keep track of our expenses. In general, we keep a high-level view of what’s going on…none of this “to the penny” nonsense (seriously, who has time for that!). I am known in our house as the “spreadsheet master” — so I have an overall budget where I track all of our expenses by “fixed” and “variable.” I input all of our major recurring expenses each month, then calculate the left over amount. Then I make a monthly allowance for “variable” and “fun” (as well as travel expenses). Whatever is left over, I move into our savings account.

      From there, we use cash / cards for our daily spending and just make sure that we don’t go over what is in that spending account. That ensures that we are not over spending, but it also makes sure that we are always saving something for the future too.

      I hate the idea of worrying about money and trying to track everything. Overall, if you can cover your bills, save some money, and have money left for fun…then you are doing great. You can move up or down your savings, but other than that — you shouldn’t be overdoing it or having to stress out about tracking it all. So Excel seems to work well for us. But of course, everyone is different.

      Happy travels!
      – Liz

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