Once the travel bug gets you it’s hard to find a cure. And boy oh boy is this illness contagious.
After a single trip, the lust for travel buries itself deep within you and pushes you to hop on a plane after plane to see new sights, meet new people, and have more experiences. And sure, wanderlust is great and seeing the world is inspiring, but there’s one thing that may get in the way: Money.
Let’s be real, travel can be expensive. Even if you’re hopping in the car for a short weekend road trip, the cost of gas, food, entertainment, accommodations, and more can get a bit overwhelming. But, with a little bit of planning, you really can indulge in your travel dreams. And it can all begin by creating a travel fund.
What Is a Travel Fund?
A travel fund is exactly what it sounds like—a fund exclusively used for galavanting around the world. It’s a place to stash some cash that you don’t use for rent, for bills, for repaying student loans, or any other of the obligations typically requiring our monetary focus. This fund is just for your passion in life. And your passion is clearly traveling.
Setting Up a Dedicated Account
There are a few options for where to keep your travel fund. Yes, you could keep your vacation fund in the same account as your day-to-day savings, but separating the fund could provide even more clarity.
Keeping your travel fund in a separate account can make it easy to see how close you are to reaching your travel goal since you can see exactly how much money you’ve saved for the cause with ease.
Having the money in a separate account also means you can set up automatic contributions, just as you might already be doing with your other accounts.
This means you can eliminate another task from your to-do list. You’ll be making progress toward your dream of cruising down the Nile without even having to think about it.
Tips on Selecting an Account to Use
When it comes to setting up a dedicated account, the first order of business is usually to pick an account type. There are a variety of options to choose from. Part of what will likely influence your decision is how long you plan on saving. If you want to take a trip in just a few months, a savings account may be a good vehicle.
Another option could be using a certificate of deposit (CD) . This type of account can sometimes offer a more competitive interest rate than a traditional savings account but comes with withdrawal restrictions. If you choose to withdraw the money before the term ends, you’ll likely have to pay a penalty or fee.
Yet another option is a high-interest savings account, these accounts are often designed to provide the flexibility of a checking account while offering a more competitive interest rate than most traditional savings accounts.
Some of these accounts may come with certain restrictions, like a limited number of withdrawals a month or maintaining a minimum balance, so read the fine print on each account you might be considering.
A different option to consider is a cash management account with a brokerage firm. These accounts are meant as an option for your uninvested money.
They can also be great for putting away some extra money to save, park it before investing, or travel. With a cash management account like SoFi Money®, you can create specific money vaults for each of your financial goals, like your vacation fund.
This allows you to keep your vacation fund separate from your checking account, emergency savings, or regular savings account. Oftentimes you can even give it a unique name like “travel fund” or even more specific like “Tahiti fund.” It’s much more exciting to watch “dream trip to Bali fund” grow than just “account: 3283052.”
Need a place to store your travel fund?
SoFi Money® allows you to organize your
money into different vaults
to save for specific goals.
Growing Your Travel Fund
After you’ve created your unique travel fund it’s time to put in some work. And that begins with your budget. If you already have a budget that’s great. All you need to do is add in “travel fund” as a new line item and shift as much money as you feel comfortable moving to this new account each month.
But, if you’re starting from scratch that’s OK too, and trying to save for the trip of a lifetime is just as good an excuse as any to start budgeting.
To build a budget, people generally start by compiling all of your documents including income statements and any statements on loans, mortgages, or other debts.
Next, it’s good to create a list of all your monthly expenses. Here’s where you should include all the basics like rent or mortgage, car payments, student loans, credit card statements, food, gas, insurance, gym memberships, streaming accounts, your investment account and emergency fund, and anything else you can think of. Make sure to get as granular as possible about your spending.
Then, list out all your after-tax income. It’s key to create a budget on after-tax income, otherwise known as net income, rather than pre-tax to get a realistic look at how much money you’re working with.
After looking at your must-spend list vs. your income list you should be able to see how much you have leftover. If it’s more than $0 congratulations, you can put that extra money in your travel fund. Just make sure to reevaluate your budget from time to time to see if you can make any tweaks to add more to your travel fund.
You also might want to make sure you are on track for your long-term financial goals such as paying down bad debt, saving for an emergency, or planning for retirement before allocating your monthly surplus towards short-term travel.
Finding Extra Cash for Your Travel Account
If you’d like that leftover number in your budget to be higher maybe it’s time to take a look at both your spending and your current income level and reassess where changes can be made.
One of the potentially easiest ways to create more cash for your travel fund is to look deeply at your monthly spending.
Are you still subscribing to that streaming service you no longer use or are you signed up for that premium version of that social media platform you haven’t been on in months?
What about that gym membership? How’s that going for you? Go ahead and cut the fat. Then, refocus those funds in your travel fund.
If there’s no room for cuts, then it might be time to increase your income. Of course, you could always ask for a raise at work, but if that doesn’t come through explore some other options—like a side hustle.
A side hustle is a gig you take on outside your normal work to rake in extra dough. If you can, pick something you really enjoy doing so it feels less like “work.” For example, if you’re a social butterfly who loves to chat up new people perhaps driving for a ride-sharing service might be for you.
If you are a handy person who likes to fix things creating a listing on sites like TaskRabbit may be a good idea. And, if you want to indulge your other talents like photography, writing, or graphic design, try reaching out to a few places as a freelancer. That way, you can get paid for what you love to do and save for what you love too.
Finding a Travel Friendly Account
By now you’ve committed to re-adjusting your budget and setting aside cash in a new fund, which is wonderful. But, why not take it one step further by putting your travel fund into an account that will grow for you too?
With a cash management account like SoFi Money®, you’ll earn 0.20% APY (Annual Percentage Yield) on all your cash. And users can have multiple sub-accounts, like a travel fund or an emergency fund, within their one umbrella SoFi Money cash management account.
That way you can transfer different amounts to different vaults within SoFi Money each month without any extra fees or any extra headaches. We aim to keep fees low, but our program fees are subject to change.
Your SoFi Money cash management account also comes with a dedicated debit card so you can take money out of any ATM within the Allpoint® Network and pay no fees. This way, you can get to cure your travel bug sooner rather than later.
Want to travel more? Find out more about how SoFi Money can help you save smarter not harder.
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