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When we start earning our initial goals are to get a car, build a house, and save for retirement. However, when all things settle down smoothly, we, certainly, can have a fun fund as well. For those of you who love traveling to different places, the world has a lot to offer.
Ranging from the scenic beauties of Europe, a candlelight dinner on the Dubai Dhow Cruise Marina to the charm of the Eiffel Tower in Paris, there are lot many things to experience on this beautiful planet. However, it is not wise to travel on the funds obtained through a personal loan or utilizing your credit cards for the purpose as you will accumulate a lot of debt. On the other hand, you might ask, is it possible to save enough for traveling without racking up loans or swiping plastic money? It is, certainly, possible and in this post, we are going to share with you the methods to do so.
How to Save for your Vacations?
- Set Aside Some Funds Each Month for Traveling
Of course, big travel plans do not come up instantly. Therefore, just like your other goals, you can view your vacations as short-term goals and start saving for them early on. Try to put aside a specific sum of money, howsoever small it may be, for your future travel plans. People will say that the best way is to keep money in your Savings Account; however, there are high chances that you could end up spending the bucks you save from your Savings Account.
Hence, the question that comes up now is that if not Savings Account then where to save bucks for traveling purposes? The best ways are those where the extra money remains out of sight but is accessible on short notice. Almost, all the travel plans take up to 6-12 months to materialize. Therefore, why don’t you set up a Fixed Deposit for a year? Our objective here is to set aside the money for traveling purposes without focusing on the returns. By keeping the amount as a Fixed Deposit, you will refrain from spending the same and when the time to travel comes, you can utilize the Fixed Deposit amount for the same. Hence, you are not accumulating any kind of debt in this procedure.
Recurring Deposit is another way to set aside funds for traveling. In the case of Recurring Deposit, you require putting away a specific amount of money each month. This way, when the time to travel comes, you would have accumulated enough funds for your travel expenses. Therefore, you can go in your travel plans without accumulating any kind of debt.
Also, nowadays, almost all the banks offer a special wallet or a wish-deposit feature where you can add a certain amount each month until you have obtained your goal. The good thing here is that you will get interested as well on the amount which you will be putting aside in the form of a wish deposit.
- Plan well-in-advance
It is quite obvious that when you are thinking of going for a longer trip, you will plan well-in-advance. The benefit here is that you can book good deals based on your travel plans. Flights and holiday packages are considerably less expensive when booked in advance as compared to on-the-spot booking. Same goes for hotels as when booked well-in-advance, you can get great deals.
- Use an investment account
If you feel, you can also utilize your investment account as a travel fund account. This method might not work for everyone but it is a good way to save money for your travel plans. Since investment accounts are taxable; they enable your funds to grow at a faster rate. Moreover, you can choose to have a robot advisor for your account as well. These robot advisors are based on artificial intelligence and machine learning algorithms. Once you have decided upon your asset allocation, the robot advisor will do the rest for you. The robot advisor even does rebalancing for you to maintain the asset allocation provided by you.
Please make sure that you put aside a set amount each month for your travel investment account. It may happen that you might not be able to put more in the beginning, but you can increase the amount later gradually. This is the benefit of an investment account. You are not bound to put aside the same amount each month. You can decide the amount each month in accordance with your earnings and budget. Side-by-side the joys of watching your travel fund grow at a much faster rate as compared to a traditional savings account is unequaled and unparalleled.
The other fantastic benefit that comes with keeping an investment account for a travel fund is that you do not have to worry about any kind of early withdrawal penalties or other associated charges. Only thing is that when required, you need to withdraw money in advance from your investment account as it generally takes more than a week for the money to come to your attached savings account from the investment account.
However, if there are good sides to using an investment account for travel funds, there is a bad side as well. You must be ready for the tax implications of using an investment account for a travel fund. Moreover, you must have a risk-tolerance before putting your money in an investment account. It might happen that the market drops when you are just about to leave for your vacation. Hence, it is best to keep attention over the market a couple of months before the planned trip. You must have it in your mind that any kind of market incident can deplete your funds which you have set aside for traveling. Therefore, consider moving the required funds to your attached savings account much before the date of your planned trip. Make sure that you do not end up spending the same on other expenses.
Hence, reiterating what we said in the beginning, using an investment account for a travel fund is not for everybody. However, if you have the appetite for an investment account, go for it as your funds will grow at a faster rate as compared to a traditional savings account and other associated money saving methods. Just with a little extra care, you can stay safe from the consequences of the downfall of the market.
Final Words
If you are a travel buff and want to satisfy the wanderlust inside your soul, it always pays to plan well-in-advance. Setting up money aside each month for travel purposes is the best way to convert your traveling dreams to reality. You do have the immediate convenience of personal loans and credit cards, however, going on a vacation in the present while keeping your future in debt is not a good idea, though the majority of the people go for the same only. Apart from the ways mentioned in this post, there is a plenitude of other ways through which you can save and grow your travel funds. Hence, do proper research and utilize the way which suits you best. After all, life is not all about working and earning. Spending on your dreams forms a major chunk of life as well. We hope we are able to help you through the medium of this post. You are welcome to put forward your questions and queries in the comments section provided below. Also, if you have another way in mind to save efficiently and effectively for travel, let us know about the same. We will love to hear from you.
