Nearly two-thirds of Americans pay for vacations with savings – how to create your own fund

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Despite the constant news that Americans are overcharging their credit cards when it comes to travel, they seem to prefer using their savings. This is according to a survey conducted by GOBankingRates in April 2022, in which 62% of respondents indicated that they used savings instead of a credit card or other source of financing their travel expenses. This is a smart move, because going into debt just to go on vacation can have long-term financial consequences. If you need help building your own travel fund, take a look at these tips to help you save up for a great vacation without getting into debt.

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Create a dedicated travel fund

Travel savings is a good strategy, but the best way to save money is to create a separate account dedicated exclusively to your travel fund. Most Americans have multiple savings goals, from retirement to college funding, emergencies, and more. If you keep all this money in one account, you are more likely to use it for other purposes. You don’t want to be in the position of “borrowing” from your retirement savings to finance a vacation, just like you don’t want to borrow emergency funds from your travel savings. Keeping your accounts separate is also a good way to keep track of how close you are to meeting each of your individual savings goals.

POLL: How much do you plan to spend on travel this summer?

Set up automatic translations

Saving is inherently difficult for most Americans. While most people want to save as much as possible, the reality of everyday life often provides excuses that get in the way. If you intend to save up as much travel funds as possible, you should strongly consider setting up automatic transfers. With automatic transfer, you don’t have to worry about missing a deposit any week or month. Perhaps more importantly, you will protect your travel savings from impulsive spending or using money for other purposes, as it will be automatically deducted from your checking account without you even thinking about it.

Enter all windfall income

An unexpected payout is any money you receive that you either didn’t expect or is something out of the ordinary. A bonus at the end of the year, for example, qualifies as a windfall, just like an inheritance or a large tax refund. Any time you receive an unexpected payment, transfer it to your travel fund immediately before you’re tempted to spend it. Windfall income can be a great way to quickly increase your vacation savings.

Use Consolidated Accounts

Another good way to put more money into your travel fund is to use an app that rounds up your purchases and puts an extra amount into savings. For example, you buy a cup of coffee for $3.69. The Consolidation App will charge even $4 off your card and an additional 31 cents will be paid towards your trip…

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