Guest Post by Ben Walker
Traveling is an excellent way to broaden your horizons, whether it’s exploring a landscape you’re not familiar with or immersing yourself in a new culture. But it can get expensive.
According to a 2021 travel trends report from AARP, millennials plan to spend $4,017 on travel for the year, Gen Xers plan to spend $5,028, and baby boomers plan to spend $6,691. These numbers can vary depending on your destination, the number of people traveling, and your length of stay. But after accounting for flights, hotel stays, a rental car, activities, food, and other common travel expenses, you can easily find that your total trip ends up costing thousands of dollars.
Do you want to travel but think it might put you into debt? Here are five ways to approach traveling without ending up owing anyone money.
Budgeting is one of the most effective ways to save money for specific financial goals, which could include saving up money for a trip. There are different budgeting techniques, so you should choose the one that works best for your situation. That could mean taking a certain amount of money out of each paycheck or having a goal to hit each month — just use whatever strategy fits your lifestyle and helps you stay motivated.
Regardless of the budgeting method, track your total income and expenses. This will give you an overview of your financial situation and pave the way for making smart future decisions. And tracking your finances is easy with certain finance management tools.
Once you know the exact amount of money coming in and going out, focus on the areas where you might be able to cut your spending. This can be helpful if you feel like you have no room left in your budget to start setting money aside. But if you have room to cut back on unnecessary spending, you have room to fund your travel savings.
To potentially make things easier for yourself, consider setting up automatic transfers from your main bank account to a specific account for your travel budget.
You might think that using credit cards would result in more travel debt. And in some cases, that could be true. It’s easy to throw all your travel expenses onto a credit card and then worry about paying it off later. But this type of strategy can quickly lead to racking up credit card debt that soon becomes too difficult to manage.
If instead you approach credit cards with the mindset that they’re tools to be used for reaching your financial goals, you might be more likely to exercise some caution. This doesn’t mean you can’t use credit cards for all your travel expenses, but you should only do so if you’re planning to pay off your balances each month.
Using this method, it makes sense to use the best travel credit cards to fund your travels. You can earn credit card rewards on all your eligible expenses, including everyday purchases such as groceries and gas. These rewards can then be used to help cover flights and hotel stays, which are often two of the biggest travel costs.
Be sure to compare different credit cards and the rewards they earn so you can get the most out of your credit card rewards.
It may not always be possible to have flexibility with your travel plans. You might have one window of vacation time that you can use during a certain month of the year and that’s it. If this is the case, you unfortunately won’t have as many options for decreasing your travel costs. But if you’re able to be flexible with when and where you travel, you can find a lot more budget-friendly options.
Peak times will vary depending on your destination. But, for example, many Americans want to travel during the summer months because their kids are out of school and the weather is nice. This causes prices to rise in certain areas for flights and hotel stays because a lot more people want to travel during these peak months. If you’re flexible with your plans, you can avoid traveling anywhere during a destination’s peak season(s), which should cut your travel costs by a fair margin.
Being flexible on your destination itself can also help cut costs. If you simply want to visit an area with beaches, you could save a lot of money by traveling to the relatively inexpensive countries of Southeast Asia rather than taking an expensive trip to the Maldives.
Along with having some flexibility in your travel plans, you should also do the proper research on where you’re traveling before the dates of your trip. This includes knowing how you’re getting there and back, where you’re staying, and what you’ll be doing while you’re there.
Apart from giving you a plan for your travels, doing research can also offer opportunities for you to save money. For example, it’s easy to book a flight through an airline’s website, but how do you know you’re getting the best deal? To compare flight prices, use tools like Google Flights, Skyscanner, Kayak, and others to see which airline and flight route might offer the most savings.
This same strategy can be used for hotel stays and car rentals as well, though the sites you use will likely be different. Even if you’re planning to use credit card rewards to book award flights or award stays, this type of research can help you save points and miles. You can then use your saved rewards on more travel opportunities, further decreasing your travel costs.
Do you need travel insurance while traveling? Not necessarily, but it’s not a bad idea. In many cases, travel insurance is cost-effective and could help you recoup expenses for unforeseen circumstances that arise during your travels.
For example, what happens if you have to cancel your trip? Or what if you incur emergency medical expenses while overseas? Credit card travel insurance can cover certain things, such as trip interruptions or cancellations, but a travel policy from an insurance provider is typically more robust.
If a travel insurance plan that costs a few hundred dollars covers you for thousands of dollars worth of medical treatments or pays to replace your expensive smartphone, the policy more than pays for itself.
Overall, there are plenty of ways to avoid travel debt, though the best ways for you will depend on your lifestyle and financial goals. But before you consider saving up for traveling, you should first pay off any debt you may already have.
Traveling will likely cost some money, even if you follow these tips. So going on a trip before tackling existing debt may not be the most financially sound course of action. Learn how to pay off debt beforehand, and you’ll have more financial freedom to start your travels.
Ben Walker is a credit cards and travel writer at FinanceBuzz who loves helping others make informed and financially sound decisions, especially when it comes to traveling the world. He does this by explaining key principles involving credit cards, budgeting, banking, insurance, investing, and more.
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