How to Save Money for Travel: 10 Actionable Tips

Wondering how to travel more? It’s really quite simple – spend less of your salary or earnings, and save and invest the rest. This post with tips on how to save money for travel will be a bit number heavy in certain sections but numbers are essential for our rationale and for your travel plans. So bear with us for now and slowly make numbers your friends!

1. Set a goal

Before you start saving money from your salary or earnings, you should set a goal. It is the most important thing to do before you even think about saving money. Just like at your workplace, your travel goal should also be SMART – specific, measurable, achievable, realistic, and timebound. Don’t worry! We will not get into the jargon but we will follow the same formula to explain further. So, answer the following questions to set your goal.

Which locations do you want to travel to and for how many days?

Have an idea of how many locations you wish to travel to domestically and internationally. Research to determine which locations these are and how many days you need or want in these destinations. Google things like the best place to visit in the world for (whatever is your interest), places to visit in a certain continent or country, etc. Here’s one on our blog to help choose the best summer destinations in India. To determine how many days to spend in a location google things like how many days required to visit ABC and see some travel itineraries to get a fair idea. We always address these queries in our travel guides. See our travel guides: Sri Lanka, Maldives, New Zealand.

What will the estimated trip cost be?

Use a website like budgetyourtrip.com to understand the daily travel cost of your destination. However, keep in mind these costs may vary a lot depending on season or off-season time so it might be worth researching season-wise too. Multiply the daily cost to the number of trip days for that destination (determined above) then add flight or train costs for a rough estimate of your total trip cost. Add another 10% to it to account for any variation. Monetary goal therefore equals 110% * [(daily cost * no. of days) + flight or train)]

Now do this for all your shortlisted destinations.

When do you want to travel to these locations?

It is important to know how many months or years you need to accomplish your goal to know when you can travel there. Now do the math. Divide the amount of money to need to accomplish your goal (determined above) by the amount of money you can save each month. This will give you the number of months to make your trips happen. If you have a fixed date in mind for your trip already, then divide the total amount needed by the number of months left for travel to know how much you need to save per month.

Basically, a travel goal would look a bit like this – A husband and wife are earning Rs. 1,00,000 a month combined. They want to travel to Ladakh for 10 days (need Rs. 1,00,000) and the Maldives for 4 days (need Rs.3,00,000), so they will need about Rs. 4,00,000 being mid-range travelers. They can afford to save 40% of their money (Rs.40,000) each month. Therefore, they will have to save the said amount for 10 months to be able to make enough money to travel to both locations in one year. The first trip requiring Rs. 1,00,000 is possible after 3 months and the second trip after 7 months of the first trip. 11th and 12th-month savings can be used for longer-term goals (for priorities other than travel) or for more lavish trips.

Ensure that the amount of money you plan to save each month is realistic and achievable. You’ll want to be strict with your spendings yet enjoy your daily life.

I know this sounds like a lot of work but this is what it takes for efficient planning. While it is possible to plan your trips as and when, we would recommend planning them at least one year in advance. You can change the destinations later as well but you will have already saved up enough to travel to places that fall within a similar budget.

Now, let’s talk about how to make your goals a reality!

2. Spend less money

This is basic and pretty obvious. You need to spend less money so that you can save more. I’ve seen people spend exorbitant amounts on vices and food mainly alcohol, cigarettes, and eating out, and then question how others afford to travel far and wide. The basic tenets for spending less are this – cook at home, stay at home, do free things when you go out, shop less, and cut down on the vices.

Putting the obvious behind us, we will discuss how you can identify money guzzlers in your expenditure pattern and find a way to reduce these.

3. Track expenses daily

Keep a track of each and every expense of yours – from rent to general medicines. You can either use an excel sheet to do this (like we used to back in 2012) or better yet, download an expense tracker app. I use the Spending Tracker App (Android | iOS) for this but you could use other popular apps too.

Make it a habit to either track your expense as soon as you incur them or before bedtime. But do it every single day!

4. Analyse category-wise expenditure

Just tracking your expenses isn’t going to cut it. You’ll have to analyze your expenditure too and see where you can reduce it. The analysis is best done in categories. Example – utilities, medical, gifts, entertainment, groceries, eating out, etc. Classifying them into categories like this will enable to you understand where you’re spending the bulk of your money. You can then drill down into spends in each category to ascertain exactly which of these spendings are making a hole in your pocket and try to reduce them. The app mentioned above helps you track expenses into categories!

Make this a monthly activity – sit and analyze your previous month’s expenses every first day of the month. The first few months are crucial to identify a pattern in your spendings, savings, etc., and make a monthly budget.

5. Keep to a budget

After you’ve spent one to two months analyzing your earnings and expenses, you’ll have to fix a monthly budget. We suggest fixing a budget for each category which will sum to a total budget. Expenditure on things like rent and utilities will stay almost fixed but others may vary depending on your habits. These are very important to keep track of so you can control your urges to spend! Whenever you want to spend on something, check if you’ve exceeded your budget for the month in that category and spend accordingly. You can also choose to allocate a certain category’s budget into another one depending on your needs. Ensure you never cross the total budget.

6. Take full advantage of deals

Earlier you may or may not have not paid any attention to deals for groceries, appliances, travel, and more. But now you definitely should for not only expensive items but all items.

If you’re learning how to save money in India, look for things like these:

1. Make credit card payments through the CRED app ( iOS | Android ). Then use Cred points you earn on Cred deals. Most deals we have made use of have been pretty great!
2. Groceries – If you go to a particular supermarket to buy your groceries, go to a few to others and see which store offers better deals. If you buy your groceries online, then don’t stick to just one platform. Try Amazon Fresh, BB Daily, Big Basket, Milk Basket and others to see which ones help save more money. Also, it may help to buy in bulk as these platforms offer discounts for the same.
3. Food: Make use of apps and programs like Zomato Pro (discount on restaurants including home deliveries) and Swiggy Super (unlimited free deliveries and buy one get one on certain restaurants) and DineOut (they have deals on restaurants and also offer cashback when you make restaurant bill payments through the app). Choose to eat out at restaurants with deals on these apps.
4. White Goods- For all expensive items watch out for Amazon and Flipkart sales. Also, compare prices with brick and mortar stores because sometimes they offer better deals. Sale or no sale.

7. Make a separate travel fund

Do not simply leave your earnings in your salary account or savings bank account from which you spend money. You will either not realize when most or all of it is over or think you’ll make that money again whenever you want to spend it on unnecessary things. You have to be very strict here. Determine a percentage of your earnings that you’ll save and transfer to a travel fund. This is your very own digital piggy bank the money of which is only to be used for travel. A travel fund can be another bank account or/and a recurring deposit (we use ICICI iWish). The amount of money to be transferred to it will depend on your financial situation and goals.

8. Save a set amount in the start of the month

Usually, what happens is that if money is kept lying around in the expense-making bank account till the end of the month, it has a tendency of getting spent. So, the solution to this is to set up a standing instruction in your bank to automatically transfer a specific amount of money to your travel fund on a pre-determined date around the beginning of the month.

Here is how we save for travel.

Firstly, We have an ICICI iWiSh (a goal-based flexible recurring deposit) that gives us better returns compared to our bank account and ensures we don’t withdraw the money unnecessarily as a small penalty is levied on doing so before the end of the tenure period. Our bank has a standing instruction to automatically transfer a set amount to this recurring deposit on the 5th of every month.

Secondly, we have a secondary bank account where we put in all our extra money. This includes any monetary gifts, bonuses, award money, and any leftover money we have at the end of each month.

So we have one account we can’t touch at all (perfect for long-term goals or yearly international travel goals) and one account which we use for frequent domestic travel.

9. Put any impulse buy amount in your travel fund

If you have a sudden desire to purchase expensive bags, clothes, watches, shoes, etc. or any other item you don’t really need, just put that money then and there into your travel fund. Who knew being a shopaholic could be used to your advantage. Hah.

10. Invest in the stock market and mutual funds

Yes, there is a risk associated with the stock market but nothing gives better returns. As such, we would suggest investing at least some portion of your money on equity. If you’re already an investor, you know what we are talking about.

If you’re new to the stock market and would like to understand how things work, I’d suggest buying a book to understand the basics. We have a background in finance so found this book a bit basic, but it’s worth it if you’re new to investing. Further, if you don’t have a Demat account yet to trade in the stock market, you can easily open one by clicking here. Their account opening process is super simple and brokerage rates are a steal!

Also, we would suggest to keep a track of market crashes and invest in blue-chip companies. Blue-chip companies are the safest bet and give you a 10-15% return when the market stabilizes again. This is a very crude suggestion but a simple, logical one that works. If there is no crash in the market, save the investment money in a savings account so you have the funds ready when the time is right.

If you think equity is too risky or you just don’t have the time for it, then invest in mutual funds. Research well and invest accordingly. In the 7-8 years that we have started to invest, mutual funds have given us about a 15% return compared to RD’s and FD’s 4-7%.

Here is a suggested break up of how you can save and invest. Note that we aren’t wealth managers so can only suggest what works for us. We save and invest about 40% of our earnings each month nowadays (started at 10% back in 2012) and seek to spread it between various types of schemes from bank accounts to equity to have a balance of safety and returns. So, your saving and investment pattern will highly depend on your risk appetite and salary! You can always consult a wealth manager for a tailored approach.

Save in Secondary Account: 10% of Income

Save in a Recurring /Fixed Deposit: 10% of income

Invest in Mutual Funds: 10% of Income

Invest in the Stock Market: 10% of Income

We hope you found our money saving tips helpful. If you have any suggestions of your own, please feel free to drop it in the comments. We aren’t perfect and would love to learn from you and save more to travel more.

To know how to save money on travel in the planning phase and during actual trip read our post on Money-Saving Travel Hacks.

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