How to Save for a Vacation: 8 Budgeting Tips

How much to save for a vacation depends on where you’re going, how long you’ll be there, how large your group is, your method of transportation, and other factors. However, to give you a general idea, the average cost of a one-week vacation for one person in the U.S. is about $1,990, or around $3,980 for two people. 

Along with average vacation costs, it can also be helpful to think about the “50-30-20” budgeting rule when saving money for a trip. This rule suggests allocating 50% of your net income for needs, 30% for wants, and 20% toward your savings. While the 50-30-20 rule offers a helpful starting point, it’s important to consider your unique financial situation when creating your travel budget.

Research shows that different age groups take different approaches to saving for vacation. Exactly 50% of both Baby Boomers (born 1946 to 1964) and Gen X (born 1965 to 1980) said they planned to spend at least $1,000 on travel in 2023, compared to just 31% of Gen Z (born 1997 to 2012) and 43% of Millennials (born 1981 to 1996). Interestingly, the percentage who planned to spend at least $5,000 was similar across all age demographics: 13% of Gen Z, 16% of both Millennials and Gen X, and 17% of Baby Boomers.

Trends in vacation spending — and saving — have shifted over the past few years. According to research by McKinsey, 66% of people are “more interested in travel now than before the COVID-19 pandemic” — especially domestic travel, with Baby Boomers “planning to take twice as many domestic trips” as Millennial and Gen Z vacationers. Another survey showed that 63% of Americans planned to travel in 2023, up from 58% in 2022, with over one quarter (28%) spending more on travel in 2023 than 2022.

1. Create a vacation budget

The first step of saving for a vacation is to determine your budget. This can give you a clear idea of the savings goal you may want to reach. Depending on your travel plans look like, your vacation budget may include items like: 

• Airfare, bus fare, or train tickets 

• Bars and restaurants 

• Cruises 

• Entertainment 

• Hotel accommodations  

• House-sitters or pet-sitters

• Public transportation

• Rental vehicles, parking, and gas

• Rideshares or cab fare

• Vacation rentals like Airbnb 

Creating a detailed budget ensures that you can enjoy your trip to the fullest, without accidentally overspending.

2. Set up a vacation savings account

Watching yourself make financial progress is a great way to stay motivated and avoid the temptation to overspend. Creating a savings account for your vacation expenses can help you stay on target so that you can reach your goals. Not only can creating a savings account make it easier to manage your vacation budget, it also gives you the motivation boost of tracking your progress. Setting up automatic transfers can help you keep yourself accountable, while choosing a high-yield savings account can potentially help you build your savings faster.

3. Start saving early

Breaking big goals into small steps can make them feel more manageable and achievable. The same thing is true when it comes to reaching your savings goals. When saving for vacation, starting early and going slow can give you the time and flexibility to build your account over time with small deposits that accumulate. Consider setting up automatic recurring deposits, like automatically depositing 10% of each paycheck into the account, to help you stay on track.

4. Take advantage of credit card rewards

Numerous credit cards offer travel rewards that can be exchanged for discounts and savings on expenses like airfare or hotels. If you have a credit card or plan on signing up for one, check whether it offers rewards like sign-up bonuses, travel points, hotel points, or air miles that can shave costs off your next trip. It may also offer cashback on all or select purchases, which you can put toward your travel expenses. If you travel frequently, you may even want to consider a travel credit card to maximize your deals and rewards.

5. Limit unnecessary expenses

Temporarily reducing or cutting out unnecessary expenses is a key strategy in saving for vacation — or, for that matter, reaching any type of savings goal. You might be surprised by how much money you could save simply by canceling unused subscriptions, swapping takeout for home-cooked meals, or switching from brand-name to generic products.

6. Eliminate any debt

Your vacation savings plan should prioritize paying off any debts you currently owe. Eliminating debts reduces the bills you owe each month, which frees up more of your savings to put toward travel. In addition to consolidating debts or paying off your debts completely, flexible payment options can also help you maximize the amount you can put toward your vacation. By giving you the ability to break bills and other expenses into smaller payments, buy now, pay later (BNPL) services like Zip can be powerful tools for helping to improve your cash flow. While Zip and other BNPL services are not a debt consolidation tool, flexible terms allow you to purchase now and pay in installments after your vacation.

7. Find additional sources of income

When saving for vacation, it’s important to seize opportunities for boosting your income. Get creative about reaching your goal, like holding a garage sale, selling old clothing to vintage stores or consignment shops, or even exploring ways to go professional with your hobbies. Depending on your schedule and lifestyle, you may want to consider temporarily taking on a second job or look for part-time work outside your regular hours to help fund your vacation.

8. Research travel deals

Taking advantage of deals and promotions is a great way to help slash your travel costs — and the lower your costs are, the less money you need to save for vacation. Some websites and apps that can help you find great travel deals include Tripadvisor, Priceline, and Expedia. These platforms allow users to compare prices, check ratings and reviews, book flights and hotel rooms, make reservations, and more.

Zip is a free mobile app that helps make saving for vacation simple. Zip lets you break up purchases into 4 smaller payments², giving you the power and flexibility to manage your budget. By using Zip to split bills and expenses, you can free up extra savings to put toward your next vacation. You can also use Zip to help pay for travel expenses, plus score exclusive deals on hotels, flights, and more. Best of all, it’s quick and easy to sign up for Zip – right at checkout!

You can make saving money for vacation easier by following a few simple strategies, like creating a detailed budget, searching the web for great deals, and taking advantage of credit card rewards like airline miles. It’s also important to start saving early and contribute often, which lets you build your vacation fund gradually without creating financial stress. Following these strategies will help you steadily reach your savings goal, no matter what destination you plan on exploring next.