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Header How to save for a vacation
• Jan. 30, 2024

Are you dreaming of a getaway on a secluded beach to escape the cold, or thinking of jetting halfway across the world to a culinary destination to enjoy an indulgent food experience?

You're not alone.

As winter settles in across Canada and memories of glorious, hot summer days have long faded, the desire to vacation—but in a budget-friendly way—is on the wish list for many Canadians in the new year.

According to a recent survey funded by British Airways and conducted by Research Now, one in five Canadians say they plan to travel more than ever before in 2024.

However, for many Canadians, the rising cost of living and higher interest rates remain top of mind and are putting a squeeze on travel budgets.

Which begs the question, if you do have a serious case of wanderlust, how can you make vacationing work financially? Below are some tips to help you plan and save for your next adventure:

Create a travel fund

Creating a budget from scratch can be challenging. And at times, sticking to it can be even harder. But if you have a savings goal in mind—such as paying for a vacation—a budget can help you prioritize essential expenses and identify areas where you can reduce your spending, leaving you with money to save for travel.

Once you've set out a list of all your expenses (both essential and nice to have) as well as your income, you can then determine where you can make some changes so that you can add a savings category to your budget and direct the savings from not making certain purchases toward a vacation fund. Money management tools, such as TD MySpend, can help you track your monthly spending and provide insights on how you can save more. This, in turn, may help you reach your travel goals faster and help alleviate some of the financial stress involved with a vacation.

For example, if you've determined that your trip is going to cost $4,000 (including return flights, ground transportation, food, drinks, sightseeing/excursions, hotel/accommodations), and you have a year to save, you could divide the amount you are budgeting for your trip by the number of months you have to save (for this example, consider setting aside roughly $330/month prior to departure).

Remember that the shorter your lead time, the more you'll need to save.

Whatever you can save, consider opening an account dedicated to saving for your vacation, or automatically transferring money to this dedicated savings account. At TD, you can automatically transfer money using the TD Pre-authorized Transfer Service.

Finally, don't forget to continue the saving process even after you book your trip. Whether it's to ensure you have enough to cover a last-minute change of plans or a spontaneous excursion, you'll want to be sure you have back up cash prepared just in case.

Search for deals and be flexible to where and when you travel

Aside from dedicating a budget or savings account to your trip, there are a ton of other things to think through when it comes to planning your vacation.

First, if you're travelling with family, you'll need to know which costs you will be paying for. If you're travelling with friends, think about which costs you might be able to split.

Of course, two of the most critical factors are where and when you're planning to travel.

Some vacations offer all-inclusive packages that can help you figure out a set amount of money you need to save to cover food, drink, and lodging costs. Other vacation spots may require more planning and budgeting. You'll also need to consider how long you plan on being there, as that will also affect how much money you need to set aside.

A top traveller tip is, if possible, be flexible and open to where and when you travel.

For instance, some destinations offer cheaper travel during the winter months versus the summer months, or vice versa. It pays to do some research on when the most affordable time of year is to travel to wherever it is you want to go. If your top bucket-list destination is outside of your budgeting means but you're adamant to travel in 2024, think about looking at other destinations you wanted to explore that may be a more attainable travel savings goal.

Leverage travel rewards points on your travel credit cards

If you're someone who's using a travel credit card, remember that many of them offer the ability to earn travel reward points on everyday purchases. In many cases, the points you earn can then be redeemed for flights, hotels, and other travel-related expenses, helping to cut down some of your vacation costs.

For instance, a TD Travel Credit Card allows you to earn travel Rewards Points on everyday purchases where points can then be redeemed for flights, hotels and other eligible rewards items at Expedia for TD, a travel site exclusively for TD Travel Rewards Credit Cardholders. Find out how you can book using your TD Rewards Points for a getaway.

Whether you are comparison shopping for flight and hotel deals or booking any excursions during your getaway, be wary of potential vacation scams. Shop only from trustworthy travel sites or directly through your credit card's redemption website if redeeming your travel points.

Factor in all costs and why you want to go on your trip

From rental cars to excursions, you'll need to factor in the cost for the activities you want to do, the hidden gems you want to see, and the souvenirs you may want to buy.

You'll also want to consider why you're going on this trip. For example, if it's an anniversary trip for you and your partner, you may feel inclined to spend more on luxurious accommodations. Whereas if you were doing a solo trip for fun, you may not feel the need to spend extra on luxury hotels. The reason for your travels may require more saving, so be mindful of your why.

Consider the unexpected costs when it comes to travel

If you're planning an all-inclusive vacation, a lot of the big-ticket costs are bundled for you as part of the final price, but you'll still have to consider incidentals like service tips, visas, vaccinations, luggage, beach ware, toiletries, and other items.

Have a pet? If family or friends can't watch your furry friend for you, you may need to hire a pet sitter. It's a good idea to take a little time to make a list of these costs and work them into your vacation budget.

You also need to factor in the cost of travel and medical insurance. Be sure that your insurance plan covers trip cancellation in case you have to cancel your trip. Learn more about TD Travel Insurance and how you can protect your trip.

While planning a vacation can be costly and even stressful, with the right tools, planning and budgeting, your getaway is now one step closer to reality.

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