SoFi

Summer is full of simple pleasures: baseball games, barbecues, beach reads, and that great American classic, the road trip. Whether you are heading to a national park or a local lake, on a wine-tasting getaway, an antiquing jaunt, or just to hang with your college roommate, a road trip can be exciting, easily wrangled, and spontaneous.

But if you’re wondering how to save money on a road trip, a little bit of planning can go a long way to keep costs under control.

Learn how to minimize expenses when you head out on a summer road trip, from deciding which vehicle to use, where to get gas, how to eat on the road, and more. Here, 25 easy ideas for road tripping on the cheap.

1. Choose a Fuel-Efficient Car

If you have a choice of cars to take, you may want to go with one that is large enough to be comfortable but also gives you the best gas mileage. This is true whether you are using your own wheels or renting a car.

You can use FuelEconomy.gov’s Trip Calculator to determine which car will cost you the least in gas. This tool helps estimate fuel consumption and how much it will cost for a particular route using a specific car.

2. Drive at or Below the Speed Limit

This cautionary measure can help you save money in two ways. For one, you’ll be less likely to get pulled over and slapped with an expensive speeding ticket.

For another, observing the speed limit can actually reduce your gas consumption. In fact, according to the U.S. Department of Energy, you can save 18 cents a gallon on highways for every five miles per hour you slow down.

3. Pack Your Car Wisely

You can also cut your gas costs by placing items inside the car or trunk rather than piling them on your roof. By reducing drag, this tactic can increase your fuel economy by as much as 25% on highways according to one benchmark study.

If you’re out of room in the car, using a rear-mounted cargo box or tray instead of a roof rack can improve your fuel economy by up to 9%.

4. Set a Road Trip Budget

When you first start talking about the road trip, you may want to roughly map out where you want to go, how long it’ll take to get there, and if you’ll need hotels or motels. From there, you can calculate the approximate cost of gas (FuelEconomy.gov can help) and tolls (try Tollsmart ), as well as food and fun.

Once you’ve established an overall budget for the trip, you start creating a travel fund.

5. Bring Your Own Food and Supplies

Packing a cooler with water bottles, drinks, hand-held snacks, and sandwiches before leaving home is a proven frugal traveler trick. You can end up saving a sizable chunk of cash by not having to buy drinks and snacks at rest stops, vending machines, and drive-throughs.

You’ll also have a quick solution the next time someone in the car wants to pull over because they’re hungry.

6. Sign up for an Electronic Toll Account

Depending on which state(s) you are traveling through, you may be able to save a fair amount of money on tolls by getting the region-appropriate quick pass (or transponder) for your car. In New York, for example, drivers with EZ-Pass can save about 30% on tolls.

7. Avoid Tolls Altogether

When your road trip isn’t on any set schedule, you may want to take the scenic route and completely avoid tolls. You can do this by setting your GPS app to “avoid tolls.”

If you’re in a location with pricey bridges and highways, your savings could really add up. You may want to make sure, however, that avoiding tolls doesn’t take you so far out of your way that you’re spending a lot more on gas.

8. Look for Hotels that Offer Free Breakfasts

If you’re comparing lodging options in a similar price and quality range, one way to save on hotel costs and on road trip expenses in general is to choose the hotel with a free breakfast.

Not only will you probably get a large, filling meal, but you might even be able to take a piece of fruit or cereal box as a snack for later on in the trip.

9. Pack Reusable Water Bottles for Everyone

You’ll no doubt get thirsty while driving and sightseeing, especially in summer, and buying water or drinks can put a major dent in your road trip budget.

Making sure everyone in the car has a large reusable water bottle (or two) to fill up at rest stops and in restaurants can help you avoid spending money on drinks, and also create less plastic waste.

10. Buy a National Park Pass

If you’re going to be road-tripping across the U.S. and visiting a few national parks, you may want to consider getting an America the Beautiful pass.

The pass (which costs $80 per year and $20 for seniors) covers entrance, standard amenity, and day use fees for a driver and all passengers in a personal vehicle (up to 4 adults) at more than 2,000 federal recreation sites.

Just remember that summer is primetime for many parks, from Yosemite in California to Acadia in Maine. If you need lodging, book early.

11. Hit the Grocery Store

Once you’ve run out of your cooler meals and snacks, consider re-stocking at a local grocery store while en route so you don’t have to resort to fast food or a pricey local restaurant for the rest of your trip.

This is also a good strategy if you’re going to be staying at a hotel for a few nights. Making good use of a hotel kitchenette and fridge can help you avoid having to eat out for every single meal.

12. Pre-Book Your Hotels

Spontaneity is great, but if you’re looking to save money on accommodations, it can be wiser to book ahead of time and stick to your plan. You can often secure a better rate by booking in advance (and online), than by showing up without a reservation or booking last minute.

13. Look Beyond Hotels

Your first thought when looking for roadside accommodation may be cheap hotels or motels. But you sometimes find a better deal (or a nicer option for the same price) using a home rental site, such as Airbnb, VRBO, or FlipKey, especially if you’re staying for more than one night.

When booking lodging, it can be smart to use a travel credit card or a cash back rewards credit card, since every swipe can help you earn points, miles, or cash back that you might apply to future trips.

14. Plan to Visit Free Attractions

Part of the fun of a road trip is to enjoy the journey and scenery while en route to your final destination.

As you travel (or before you go), you may want to research free attractions, such as a hike, walk on a beach, or a free museum, on your route for times when you need to stretch and take a driving break.

You can also look for festivals and local events by checking out the online events calendar for the towns you’ll be visiting that day. You might also check out Meetup.com and see what kinds of local groups are gathering for experiences and outings.

15. Plan Gas Stops in Advance

Getting stuck in a big city with the tank close to empty can be costly (and driving in circles looking for a gas station when you’re en route to the beach is no fun either). To avoid overpriced gas, you may want to use a gas app like Gas Guru or GasBuddy, which can help you compare prices and find affordable gas no matter where you are. This hack is an easy way to lower your gas costs.

16. Set a Daily Spending Limit

You can use your overall budget to get a rough idea of how much you can spend on the road trip each day. This can help you avoid blowing the money you’ve saved, wherever you may keep your travel fund, before the end of the trip.

A spending plan can also let you know when you can splurge a bit and when you’ll have to reign it in with a meal, activity, or lodging. You may also want to set aside some of your budget for the unexpected, such as the car getting a flat and needing to be towed, or discovering the cheap hotel you planned to stay in is actually a total dump. Also factor in some summer road-trip treats: You’re likely to be stopping for ice cream here and there and maybe even a lobster roll.

17. Entertain the Kids on the Cheap

Road trips can help you afford a family vacation since you sidestep pricey plane tickets. But remember that kids have a tendency to get bored, tired, and antsy on a road trip. To avoid giving in to impulse toy purchases, you may want to bring along their favorite toys and also pick up a variety of new ones at the dollar store before you leave.

Good choices include coloring books and games they can play in the car that won’t create a mess. You might also consider borrowing audio books or DVDs from the library to give yourself an hour or so of peace and quiet.

18. Search Online for Local Coupons and Passes

It can be worthwhile to research online coupons and discount codes for local attractions and restaurants at some of your scheduled stops.

Consider checking Groupon or LivingSocial for deals and steals. Sometimes booking online ahead of time saves you money, and it’ll give you a reason to try to reach a specific destination by a certain day.

19. Save on Alcohol

Sipping a cold beer or glass of wine at a local bar at the end of your long drive might sound like the perfect way to unwind.

But alcohol costs can quickly add up on a road trip vacation. Consider buying a few local beers or a small bottle of wine that’s native to that area to enjoy in your hotel room. You’ll save money on tipping too.

20. Volunteer at a Festival

Yes, you read that correctly. Some festivals and special events offer discounts or free admission to volunteers. You can look up events taking place in the town you’ll be visiting and reach out to the event organizer to see if they need help. Summer is full of events like these, from concerts to craft fairs to food festivals.

21. Sign up for a AAA Membership

An auto club like AAA can save you time, money, and hassle should you run into car trouble during your trip. What’s more, a membership (often starting at around $5 a month) gives you access to discounts at loads of hotels, restaurants, and many retailers nationwide.

22. Travel During the Off-Season

Yes, summer can be the most welcoming time of the year to hop behind the wheel. But visiting national parks when kids are back in school can often help save money on lodging and activities. Planning a road trip to a destination like Disney World or Disneyland? You’ll likely find better deals if it’s not during a spring break or other school vacation.

You can often also save money by visiting warm weather locations during “shoulder seasons.” This is the period in between a destination’s low and high seasons of tourism, when prices for hotels tend to be lower, and crowds tend to be smaller, at popular attractions.

23. Do Some Camping

Outdoorsy road trippers might enjoy setting up a tent at a free or low-cost public campsite. You can find out more on the Bureau of Land Management site.

This can end up saving you a lot of money on hotel costs, provided you don’t go out and buy a lot of expensive camping equipment.

If you don’t have any camping gear, you may want to consider renting equipment from an outdoor specialty store or asking a friend who regularly goes camping if you can borrow their equipment. As noted above, summer can be prime time for basking in some of America’s natural beauty, so book your campsite early.

24. Eat Out for Lunch Instead of Dinner

If there are special restaurants you want to try without breaking the bank, consider going there for lunch. You might get a slightly smaller portion than you would if you ordered it off the dinner menu, but the price will likely be more affordable.

25. Take Advantage of Loyalty Programs

Booking with the same hotel chain as often as possible and signing up for their member loyalty (or “points”) program may net you a free night after a few stays.

Travel booking services, such as Expedia, Travelocity, or Hotels.com, may also offer discounted rates and free nights for loyal customers.

Recommended: Getting the Most Out of Credit Card Rewards

The Takeaway

Planning a summer vacation? A car trip might sound much more affordable than traveling by plane. However, gas, food, and accommodations can add up.

One of the best ways to cut road trip expenses is to plan out your trip and research deals, coupons, and discounts ahead of time. Packing wisely and loading up on drinks, snacks, toys, and activities can also help cut costs once you’re out on the road.

Ready to start planning and saving for your next road trip? Consider signing up for a SoFi Checking and Savings® account.

SoFi Checking and Savings has a special “vaults” feature that allows you to separate your savings from your spending, while earning competitive annual percentage yield (APY) on all of your money and paying no account fees. You can even set up a separate vault for your travel fund.

SoFi Checking and Savings: The smart, simple way to save for your next trip.

---

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOCC0323048

Read more

You have likely heard the term “all-inclusive resort” when researching vacation ideas and know that some of the most popular ones are located in the Caribbean. And for good reason: Stunning turquoise water, miles of sandy beaches, brilliant sunshine, and loads of fresh-caught fish are big draws.

But are all-inclusives all they’re cracked up to be? Some people prefer a more authentic experience when traveling, and more upscale cuisine. Pools, parties, and group activities can be fun in moderation, but sometimes you just want peace and quiet.

Here, you’ll learn more about staying at an all-inclusive Caribbean resort, including such factors as:

•   What do all-inclusive resorts actually include?

•   How much do all-inclusive resorts cost?

•   What are the pros and cons of all-inclusive Caribbean resorts?

What Do All-Inclusive Resorts Include?

What all-inclusive resorts include varies by property, but they generally include:

•   The price of the hotel room

•   All food, snacks, and beverages

•   Most likely alcoholic beverages, though they may include only certain brands of alcohol

•   Possibly room-service meals

•   Entertainment, activities (including water sports like kayaking), and kids’ camp, depending on the resort

•   Taxes and tips

•   Possibly airport transfers

All-inclusive resorts usually don’t include the cost of excursions, but some may have activities included for free. They don’t include extras like renting a car for a day trip.

How Much Do All-Inclusive Resorts Cost?

You pay for an all-inclusive vacation upfront based on the number of nights you’re staying and the number of people in your party. Prices usually start at about $200 a night per person, with some properties costing much more, especially during peak time like winter (in the hot Caribbean, summer travel is considered off-season).

You may want to bring extra cash to tip staff, like bartenders, waiters, and housekeeping. Even if gratuities are included in the price of your stay, there may be times that you want to thank a staff member for helping you out.

Types of All-Inclusive Resorts

There are many different types of all-inclusive resorts. There are all-inclusive resorts that are meant for singles, couples, couples on their honeymoon, adults-only, families, and groups. There are even some pet-friendly all-inclusive resorts, if you like traveling with pets.

Some of the brands you may hear mentioned are Beaches, Breezes, Riu Palace, and Sandals, among others. The best all-inclusive Caribbean resorts for you will depend on the location you’re seeking, the kind of accommodations, and amenities that suit you, and of course the price tag.

Pros of All-Inclusive Caribbean Resorts

All-inclusive Caribbean resorts definitely have their advantages. Here are a few of the upsides:

Good Value

If you typically spend a lot on food and beverages on vacations, an all-inclusive resort can actually provide good value. Drinks in particular can add up quickly. So if you like to indulge in big meals and lots of cocktails while on vacay, you can really “get your money’s worth” (though it may not be the best for your health).

Live the Caribbean Dream

If you have always dreamed of relaxing on a beach in the Caribbean, an all-inclusive Caribbean resort can be an easy way to achieve that dream. All-inclusive Caribbean resorts are engineered to please tourists’ every whim, so they likely have almost anything you want on your vacation.

Low Stress

All-inclusive vacations can be appealing to those who want a relaxing vacation without having to do much planning. You don’t have to search out restaurants, beaches, or activities; everything is ready and waiting for you.

24-Hour Service

At an all-inclusive resort, you usually have staff on call 24/7 to assist you. Plenty of staff members are available to bring you a drink or room service, answer any questions, and help with special requests.

Cost Is Predetermined

When you book an all-inclusive vacation, you typically have to pay ahead of time. You will know exactly how much your vacation will cost you, unlike a typical vacation, where you may not know the cost of food, drinks, attractions, and more until your credit card bill arrives. Plus, since you have already paid for the vacation, it may make you more relaxed on the actual vacation, since you don’t have to worry about how much you’re spending.

Recommended: Where to Find Book Now, Pay Later Vacations

Cons of All-Inclusive Caribbean Resorts

All-inclusive Caribbean resorts may not be the best option for everyone. Some of the cons to consider before booking include the following:

Inauthentic Version of Local Culture

When you stay at an all-inclusive resort, you may rarely or never leave the resort. Because of this, you won’t experience the true local culture or cuisine of wherever you’re staying. Appreciating other cultures is a major component of travel for many people, which is why they may dislike all-inclusive resorts.

Food Can Be Mediocre

The food at all-inclusive resorts can vary. Some guests may find it to be mediocre, depending on the particular property. Since these resorts have to feed a lot of people (who are not paying extra for food), the food options may be cheaper, blander, and less distinctive than you would find at a local restaurant. You also may not get to experience a variety of options, since you have the same restaurants to choose from every day.

Potential Crowds

All-inclusive Caribbean resorts can get crowded. You may have trouble finding a chair by the pool or beach. Activities could be at capacity. If you go to the restaurants during the popular mealtimes, you may have to wait for a table or have slower service. (One hack for that: Consider booking dinner reservations ahead of time.)

You Can’t Cut Costs

All-inclusive resorts are like a package: You pay one price for everything. With other types of vacations, you can cut costs by eating at less expensive restaurants, cooking meals, or picnicking. You might also opt for less pricey lodging (if you know how to save money on hotels) or skip renting a car and use public transportation instead.

These are some examples of how families afford to travel. However, with an all-inclusive vacation, you have to pay the price they quote you.

Tips for Staying at an All-Inclusive Resort

If you do plan to stay at an all-inclusive Caribbean resort, here are some tips to make your vacation as enjoyable and affordable as possible:

•   When booking an all-inclusive resort, the dates will have an impact on the nightly rate. If you’re able to, travel during the off-season, like fall or spring, to save money.

•   Some all-inclusive resorts are bookable using credit card rewards. If you have a travel credit card that lets you transfer points to hotel chains with all-inclusive resorts, this could be a way to save money and use points instead.

•   Before booking a vacation, including an all-inclusive resort, you may want to consider travel insurance to protect your investment in your vacation in case something goes wrong. If you have a travel credit card, make sure you understand how credit card travel insurance works. That could be a way to get coverage.

Recommended: How to Choose Between Credit Card Miles vs. Cash Back

The Takeaway

All-inclusive Caribbean resorts have their pros and cons. Some people love them: These destinations can be relaxing and low-stress and provide good value. Others may find them crowded, with mediocre food, and they don’t allow you to cut costs. Weighing the upsides vs. the downsides should allow you to decide if an all-inclusive resort is the right way for you to make your Caribbean dream come true.

Whether you want to travel more or get a better ROI for your travel dollar, SoFi can help. SoFi Travel is a new service exclusively for SoFi members that lets you budget, plan, and book your next trip in a convenient one-stop shop. SoFi takes the guessing game out of how much you can afford for that honeymoon, family vacation, or quick getaway — and we help you save too.

SoFi Travel can take you farther.

---

Photo credit: iStock/dstephens

Terms, and conditions apply: The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.
When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.
Eligibility: You must be a SoFi registered user. You must agree to SoFi’s privacy consent agreement. You must book the travel on SoFi’s Travel Portal reached directly through a link on the SoFi website or mobile application. Travel booked directly on Expedia's website or app, or any other site operated or powered by Expedia is not eligible. You must pay using your SoFi Credit Card.
SoFi Member Rewards: All terms applicable to the use of SoFi Member Rewards apply. To learn more please see: https://www.sofi.com/rewards/ and Terms applicable to Member Rewards.
Additional Terms: Changes to your bookings will affect the Rewards balance for the purchase. Any canceled bookings or fraud will cause Rewards to be rescinded. Rewards can be delayed by up to 7 business days after a transaction posts on Members’ SoFi Credit Card ledger. SoFi reserves the right to withhold Rewards points for suspected fraud, misuse, or suspicious activities. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender. NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org).
SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.¹
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SOCC0323024

Read more

If you like to travel and appreciate the finer things in life, you might dream of a posh vacation. Maybe your fantasy is staying at a sprawling resort by the sea or an urban boutique hotel with a spectacular rooftop bar. Or perhaps you dream of immersive experiences, liking a private cooking class with a local chef or a wine-tasting tour through Napa Valley.

But then reality kicks in. You look at your actual budget and realize you probably can’t make that fantasy a reality.

Or could you? It just so happens there are a few ways to snag luxury travel for less. Learn more here, including:

•   Which destinations can help you afford luxury travel

•   Tips for traveling posh for less

Average Cost of an Affordable Luxury Vacation

It’s hard to give just one number here, since costs will vary depending on the number of travelers, your destination, and how long you plan to stay. But expect to pay a few thousand dollars.

Recent surveys indicate that the cost strictly for travel (airline tickets, parking, car rental) for a family of four on a four-day domestic trip can easily nudge close to $2,000. And that’s not including lodging or food, let alone expenses for attractions and entertainment, which can easily add another $1,000 to that sum.

So make sure to decide where to keep a travel fund and nurture it, and then work to keep your vacation’s price tag from busting your budget.

Destinations Where You Get More for Less

According to crowd-sourced travel expense site Budget Your Trip, here are a few places where you can get more bang for your buck. The average prices listed below are for two people for a week on a high-end trip. Your cost may vary, but this should give you an idea of destinations where you can travel luxuriously for less than you might think.

•   Thailand $4,675

•   Mexico $4,091

•   Portugal $3,807

•   Slovakia $3,311

•   Costa Rica $3,098

•   Vietnam $2,077

•   Morocco $1,475

Obviously, if you are traveling domestically, you’ll save money by avoiding air travel. If you can drive to a nearby city or resort, you can reallocate dollars to lodging or entertainment.

Recommended: Where to Find Book Now, Pay Later Vacations

7 Tips for Traveling Posh

If you want to travel in luxury on a budget, here are a few tips to keep in mind.

1. Visit Off-Season

It’s generally true that if you want to visit a popular destination at the same time that everyone else wants to go there, you’re likely to pay more. If your summer travel takes you to a popular beach destination, you’ll pay more than if you visit it in the off season. A week of shopping and cafe hopping in Paris may be pricey in July, but what if you went in March or November? You might be able to afford a junior suite at the hotel you’ve been eyeing vs. a standard room. The more flexible that you can be with your travel dates or destination, the more likely you’re able to travel in luxury at a reduced cost.

One way that families afford to travel is by traveling during the off season or shoulder season, which is the bridge between high season, when everyone wants to go, and the low season, where demand is much diminished.

Book a (Semi-) Private Plane

Some ultra-glamorous experiences have a surprisingly manageable price. An example: With the rising cost of airfare, you may be able to fly a semi-private jet for not much more than flying commercial. While booking a private plane will likely cost more than flying with a traditional airline (especially if you usually travel basic economy), the added cost may be worth the trade off for the extra luxury and convenience. Plus, you get bragging rights to drop the phrase “private jet” into your conversation.

With a semi-private flight, 15 to 30 passengers fly on a predetermined route and schedule. Carriers include Aero, Blade, Surf Air, and Set Jet. Typical flights go from California to Mexican getaway destinations, or New York to vacation islands off the Eastern seaboard.

Prices can be similar to first-class flights: $200 and up for a short hop; into four figures for ones that are longer flights. Bonuses include avoiding the draining experience of going through long security lines at major airports, as these carriers often use smaller private terminals.

You may also be able to use credit card rewards to help defray some of the costs.

Book New Hotels

If you’re wondering how to save money on hotels and travel in luxury for less, look into booking a brand new hotel. Sometimes new hotels will offer discounts when they first open. They might not have all the kinks worked out yet, plus they need to start building a clientele.

Just make sure that you stay flexible with your plans, since hotels don’t always open on time — consider booking your stay with a travel credit card that offers trip insurance if your hotel is still under construction.

Recommended: How Does Credit Card Travel Insurance Work?

Skip the Hotel

Another luxury travel tip is to consider alternative forms of lodging. Rather than stay in a chain hotel, you might be able to find an alternate vacation rental that gives you a more elegant and authentic experience at a similar price point.

For instance, instead of booking into a small and expensive Los Angeles hotel room, you might stay in an Airbnb or VRBO apartment in a cool neighborhood. Having, say, a whole one-bedroom to yourself can make for a stay that’s more posh and memorable.

If you are traveling with pets, you may be able to find a place that is more pet-friendly and allows you to skip hotel pet fees.

Use a Travel Agent

If you prefer elegant travel, consider using a travel agent that specializes in luxury travel. Many travel agents have access to special deals or know of ways to travel in luxury on a budget. It’s possible to come out ahead even after paying the agent their commission.

Redeem Your Rewards

Another way to travel in luxury for less is to consider using your credit card miles or credit card cash back to travel. As one example, many airlines allow you to redeem miles for business class flights, often at very reasonable rates. Or if you don’t have enough miles for a free ticket, you could buy an economy class ticket and use your rewards to bump up to business class.

Either way, when you arrive at your destination relaxed and rested after using your miles to fly business class at a fraction of the cash cost, you’ll definitely feel like you’ve traveled in style.

You may also get other bonuses. Some hotel rewards programs will offer a free night when you book three, free breakfast, and other perks for being a member. Working those freebies and discounts can really pay off.

Also, you may have points from renting a car from the same agency every time. That can give you an affordable set of wheels for the weekend so you and your bff can stay at a posh spa together.

Plan a High-Low Trip

Another way to travel posh is to prioritize what’s important to you and allocate more of your travel budget there. For instance, if you want to go to London for the theater and high tea, you can fly economy and stay in a basic hotel so you can enjoy those luxurious experiences.

Or if it’s your dream to spend a week somewhere near Cancun or Tulum and snorkel every day, make that snorkel time your top priority, budget for it, and then find a small, relaxed hotel versus one of the mega-resorts to save on your lodging bill.

The Takeaway

A luxury trip doesn’t always have to break the bank. Instead, set a budget and decide beforehand what types of lodging, experiences, and activities are most important to you. If you have the money set aside for it, don’t be afraid to splurge on something that is meaningful to you. Often those types of experiences can make memories that stay with you forever. Remember, not every aspect of a trip needs to be five-star in order for you to savor a posh getaway.

Whether you want to travel more or get a better ROI for your travel dollar, SoFi can help. SoFi Travel is a new service exclusively for SoFi members that lets you budget, plan, and book your next trip in a convenient one-stop shop. SoFi takes the guessing game out of how much you can afford for that honeymoon, family vacation, or quick getaway — and we help you save too.

SoFi Travel can take you farther.

---

Photo credit: iStock/Astronaut Images

¹See Rewards Details at SoFi.com/card/rewards.
Terms, and conditions apply: The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.
When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.
Eligibility: You must be a SoFi registered user. You must agree to SoFi’s privacy consent agreement. You must book the travel on SoFi’s Travel Portal reached directly through a link on the SoFi website or mobile application. Travel booked directly on Expedia's website or app, or any other site operated or powered by Expedia is not eligible. You must pay using your SoFi Credit Card.
SoFi Member Rewards: All terms applicable to the use of SoFi Member Rewards apply. To learn more please see: https://www.sofi.com/rewards/ and Terms applicable to Member Rewards.
Additional Terms: Changes to your bookings will affect the Rewards balance for the purchase. Any canceled bookings or fraud will cause Rewards to be rescinded. Rewards can be delayed by up to 7 business days after a transaction posts on Members’ SoFi Credit Card ledger. SoFi reserves the right to withhold Rewards points for suspected fraud, misuse, or suspicious activities. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender. NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org).
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.¹
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SOCC0323046

Read more

A health savings account, or HSA, not only provides a tax-free way to pay for medical expenses now, those tax savings mostly extend to retirement as well.

An HSA provides triple tax benefits to the account holder. You set aside money pre-tax (similar to a 401(k) or IRA), it grows tax free, and withdrawals for qualified medical expenses are also tax free.

HSAs can be a boon in retirement because you always have access to the account, even if you change jobs, and you never have to “use it or lose it” so your savings can grow over time. Thus, you can use HSA funds to pay for qualified medical expenses at any time, tax free, now or when you retire.

The other good news is that after age 65 you can use the funds for non-qualified expenses, too; you just have to pay income tax on the funds you withdraw.

What Is an HSA?

A Health Savings Account is a type of tax-advantaged savings account for individuals with a high-deductible health care plan (HDHP) — defined by the IRS as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. When selecting a plan, be sure to make sure it says “HSA eligible.”

Anyone who fits the criteria is eligible to open an HSA and save pre-tax dollars: up to $3,850 a year for individuals and up to $7,750 for families for the 2023 tax year. If you’re 55 or older at the end of the tax year, you can contribute an additional $1,000 — similar to the catch-up contributions allowed with an IRA.

An employer can also make a matching contribution into your HSA, though total employer and employee contributions can’t exceed the annual limits.

What Are HSA Withdrawals?

You can then withdraw funds from your HSA to pay for qualified medical and dental health care expenses, including copays for office visits, diagnostic tests, supplies and equipment, over-the-counter medications and menstrual care products. Health insurance premiums are not included as qualified expenses, however.

One significant benefit of HSA accounts is that, unlike flexible spending accounts (FSA), the money in an HSA doesn’t have to be used by the end of the year. Any money in that account remains yours to access, year after year. Even if you change jobs, the account comes with you.

Before age 65, there is a 20% penalty for withdrawing funds from an HSA for non-medical expenses, on top of ordinary income tax. After age 65, HSA holders can also make non-medical withdrawals on their account, though ordinary income tax applies.

How Do Health Savings Accounts Work?

HSAs are designed to help consumers play for medical expenses when they have a high-deductible health plan (HDHP). That’s because typically an HDHP only covers preventive care before the deductible, so most types of medical care would have to be paid out of pocket as they’re applied to the deductible amount.

Having a tax-advantaged plan like an HSA gives people a bit of a break on medical expenses because they can save the money pre-tax (meaning any money you save in an HSA lowers your taxable income), and it grows tax free, and you withdraw the money tax free as well, as long as you’re paying for qualified expenses.

As noted above, you can withdraw your HSA funds at any time. But if you’re under age 65 and paying for non-qualified expenses, you’ll owe taxes and a 20% penalty on the amount you withdraw.

After age 65, you simply owe taxes on non-qualified withdrawals, similar to withdrawal rules for a 401(k) or traditional IRA.

Can an HSA Be Used for Retirement?

HSAs are not specifically designed to be a retirement planning vehicle, but you can use an HSA for retirement, since the money accumulates in your account until you withdraw it tax-free for qualified medical expenses.

You could also use your HSA funds to pay for other retirement expenses after age 65 — you’ll just have to pay income tax on those withdrawals.

💡 Recommended: How to Set Up a Health Savings Account

3 Reasons to Use an HSA for Retirement

Though they aren’t specifically designed to be used in retirement planning, it’s possible to use an HSA for retirement as a supplement to other income or assets. Because you can leave the money you contribute in your account until you need it for qualified medical expenses, the funds could be used for long-term care, for example.

Or if you remain healthy, you could tap your HSA in retirement to pay for everyday living expenses.

There are several advantages to including an HSA alongside a 401(k), Individual Retirement Account (IRA), and other retirement savings vehicles. An HSA can yield a triple tax benefit since contributions are tax-deductible, they grow tax-deferred, and assuming you withdraw those funds for qualified medical expenses, distributions are tax-free.

If you’re focused on minimizing your tax liability as much as possible prior to and during retirement, an HSA can help with that.

Using an HSA for retirement could make sense if you’ve maxed out contributions to other retirement plans and you’re also investing money in a taxable brokerage account. An HSA can help create a well-rounded, diversified financial plan for building wealth over the long term. Here’s a closer look at the top three reasons to consider using HSA for retirement.

1. It Will Lower Your Taxable Income

You may not be able to make contributions to an HSA in retirement, but you can score a tax break by doing so during your working years. The money an individual contributes to an HSA is deposited pre-tax, ultimately lowering their taxable income. Furthermore, any employer contributions to an HSA are also excluded from a person’s gross income.

The money you’ve deposited in an HSA earns interest and contributions are withdrawn tax-free, provided the funds are used for qualified medical expenses. In comparison, with a Roth IRA or 401(k), account holders are taxed either when they contribute (to a Roth IRA) or when they take a distribution (from a tax-deferred account like a traditional IRA or 401k).

Using HSA for retirement could help you manage your tax liability.

2. You Can Save Extra Money for Health Care After Retirement

Unlike Flexible Spending Accounts that allow individuals to save pre-tax money for health care costs but require them to use it the same calendar year, there is no “use it or lose it” rule with an HSA. If you don’t use the money in your HSA, the funds will be available the following year. There is no time limit on spending the money.

Because the money is allowed to accumulate, using an HSA for retirement can be a good way to stockpile money to pay for health care, nursing care, and long-term costs (all of which are qualified expenses) if needed.

While Americans can enroll in Medicare starting at age 65, most long-term chronic health care needs and services aren’t covered under Medicare. Having an HSA to tap into during retirement can be a good way to pay for those unexpected out-of-pocket medical expenses.

3. You Can Boost Your Retirement Savings

Beyond paying for medical expenses, HSAs can be used to save for retirement. Unlike a Roth IRA, there are no income limits on saving money in an HSA. Some plans even allow you to invest your HSA savings, much like you would invest the funds in a 401(k).

The investments available in any given HSA account depend on the HSA provider. And the rate of return you might see from those investments, similar to the return on a 401(k), depends on many factors.

Investing can further augment your retirement savings because any interest, dividends, or capital gains you earn from an HSA are nontaxable. Plus, in retirement, there are no required minimum distributions (RMDs) from an HSA account — you can withdraw money when you want or need to.

Some specialists warn that saving for retirement with an HSA really only works if you’re currently young and healthy, rarely have to pay health care costs, or can easily pay for them out of your own pocket. This would allow the funds to build up over time.

If that is the case, come retirement (or after age 65) you’ll be able to use HSA savings to pay for both medical and non-medical expenses. While funds withdrawn to cover medical fees won’t be taxed, you can expect to pay ordinary income tax on non-medical withdrawals, as noted earlier.

HSA Contribution Limits

If you are planning to contribute to an HSA — whether for immediate and short-term medical expenses, or to help supplement retirement savings — it’s important to take note of HSA contribution limits. If your employer makes a contribution to your account on your behalf, your total contributions for the year can’t exceed the annual contribution limit.

2023 Tax Year HSA Contribution Limits

•   $3,850 for individual coverage

•   $7,750 for family coverage

•   Individuals over age 55 can contribute an additional $1,000 over the annual limit

As with opening an IRA, you have until the tax filing deadline to make a contribution for the current tax year. So if you wanted to contribute money to an HSA for tax year 2023, you’d have until April 15, 2024 to do so.

Another caveat: Once you enroll in or become eligible for Medicare Part A benefits, you can no longer contribute money to an HSA.

How to Invest Your HSA for Retirement

An HSA is more than just a savings account. It’s also an opportunity to invest your contributions in the market to grow them over time. Similar to a 401(k) or IRA, it’s important to invest your HSA assets in a way that reflects your goals and risk tolerance.

That said, one of the downsides of investing your HSA funds is that these accounts may not have the wide range of investment options that are typically available in other types of retirement plans. Investment fees are another factor to keep in mind.

It’s also helpful to consider the other ways you’re investing money to make sure you’re keeping your portfolio diversified. Diversification is important for managing risk. From an investment perspective, an HSA is just one part of the puzzle and they all need to fit together so you can make your overall financial plan work.

HSA for Retirement vs Other Retirement Accounts

Although you can use an HSA as part of your retirement plan, it’s not officially a retirement vehicle. Here are some of the differences between HSAs and other common types of retirement accounts. Note: All amounts reflect rules/ limits for the 2023 tax year.

	HSA	Traditional IRA	401(k)
2023 annual contribution limit	$3,850 (individual) $7,750 (family)	$6,500	$22,500
Catch up contribution	+ $1,000 for those 55 and older	+ $1,000 for those 50 and older (total: $7,500)	+ $7,500 for those over 50 (total: $30,000)
Contributions & tax	Pre-tax	Pre-tax	Pre-tax
Withdrawals	Can withdraw funds at any age, tax free, for qualified medical expenses.	After age 59 ½ withdrawals are taxed as income.	After age 59 ½ withdrawals are taxed as income.
Penalties/taxes	Withdrawals before age 65 for non-qualified expenses incur a 20% penalty and taxes. Withdrawals after age 65 for non-qualified expenses are only taxed as income.	Before age 59 ½ withdrawals are taxed, and may incur an additional 10% penalty. Some exceptions apply in cases of hardship or specific needs.	Before age 59 ½ withdrawals are taxed, and may incur an additional 10% penalty. Some exceptions apply in cases of hardship or specific needs.
RMDs	No	Yes	Yes

As you can see, an HSA is fairly similar to other common types of retirement accounts, like traditional IRAs and 401(k)s, with some key differences. For example, you can generally contribute more to an IRA and to a 401(k) than you can to an HSA, as an individual.

While contributions are made pre-tax in all three cases, an HSA offers the benefit of tax-free withdrawals, at any time, for qualified medical expenses.

Note that Roth IRAs also have a tax-free withdrawal structure for contributions, but not earnings, unless the account holder has had the Roth for at least 5 years and is over 59 ½. The rules governing Roth accounts, including Roth IRAs and Roth 401(k)s can be complicated, so be sure you understand the details.

In addition, HSA rules allow the account holder to maintain the account even if they leave their job. There is no need to do a rollover IRA, as there is when you leave a company and have to move your 401(k).

What Happens to an HSA When You Retire?

An HSA doesn’t go away when you retire; instead, the money remains available to you until you need to use it. As long as withdrawals pay for qualified medical expenses, you’ll pay no taxes or penalties on the withdrawals. And your invested contributions can continue to grow as long as they remain in the account.

One advantage of using an HSA for retirement versus an IRA or 401(k) is that there are no required minimum distributions. In other words, you won’t be penalized for leaving money in your HSA.

How Much Should I Have in an HSA at Retirement?

The answer to this question ultimately depends on how much you expect to spend on healthcare in retirement, how much you contribute each year, and how many years you have to contribute money to your plan.

Say, for example, that you’re 35 years old and making contributions to an HSA for retirement for the first time. You plan to make the full $3,850 contribution allowed for individual coverage for the next 30 years.

Assuming a 5% rate of return and $250 in medical spending each year, you’d have just over $230,000 saved in your HSA at age 65. Using an HSA calculator to play around with the numbers can give you a better idea of how much you could have in your HSA for retirement if you’re saving consistently.

When Can I Use My HSA Funds?

Technically your HSA funds are available to you at any time. So if you have to pick up a prescription or make an unscheduled visit to the doctor, you could tap into your HSA to pay for any out-of-pocket costs not covered by insurance.

If you’re interested in using an HSA in retirement, though, it’s better to leave the money alone if you can, so that it has more opportunity to grow over time.

The Takeaway

A health savings account can be a valuable tool in your current budget to help pay for qualified out-of-pocket medical costs, tax-free. But it can also be used to accumulate savings (and interest) tax-free, to be used on medical and non-medical expenses in retirement.

While an HSA can be useful for retirement, especially given the rising cost of long-term care and other medical needs, note that the annual contribution limit for individuals is much lower than other retirement accounts. Also, the investment options in an HSA may be limited compared with other retirement plans.

Nonetheless, it’s hard to argue with the tax benefits of these accounts.

Ready to invest in your future? It’s easy to get started when you open an online brokerage account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commission, but other fees do apply (full fee disclosure here), and members can access complimentary financial advice from a professional.

For a limited time, opening and funding an account gives you the opportunity to win up to $1,000 in the stock of your choice.

---

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
SOIN1222016

Read more