A recent blue sky day in Milan’s Sempione Park prompted one of my travel companions to say, “You know, travel is the only expenditure that truly makes us richer.” That’s perhaps not a surprising philosophy coming from Laura, who happens to be a life coach dedicated to helping people evaluate their relationship with money and value.
For most of us, the more we travel the more we buy in. Having the opportunity and privilege to travel enhances our lives, not only during the experience, but long after we return home. Travel shifts our thinking and reorders our priorities, particularly when it comes to money.
We begin plotting ways to finance the next adventure before the current trip has ended. And, we will gladly sacrifice some creature comforts at home for opportunities to jump out of that comfy zone. We daydream about new experiences, not new goods.
So how can we feed the passion without breaking the bank or running up debt? By making every hard-earned dollar stretch further.
In this two-part series, we will explore how small decisions can add up to big rewards. We asked financial and travel experts to weigh in with their best advice about what to do before you go. This week, we begin with the planning process.
We’d like to hear from you. In the next Travel Secrets column, we will focus on how to stretch funds during travel. To share your best tips with fellow readers, please email the author: email@example.com.
BEFORE YOU GO
Get Real with a Budget
Bar napkin or spreadsheet. Method doesn’t matter, details do. Creating a trip budget gives you goals to shoot for while encouraging fiscal integrity.
When it comes to putting together a budget, Zach Honig, editor-in-chief of the popular site, The Points Guy, says, “First of all, it’s important to keep in mind that you don’t need to spend a lot of money to have a fantastic trip.”
Decide what is most important to your experience and be open to saving in some areas to splurge in others. First, take into account the framework items: flights, transportation, lodging and meals. Next consider extras like tours and activities. Be sure to include travel adjacent expenses like travel insurance, vaccinations, and new travel gear. And, don’t forget, to budget for cellular calling and data plans.
Consumer and money-saving expert Andrea Woroch also advises having a contingency cushion. “The final line item in your budget should always be a cushion to offset any unexpected expenses or to fund a spontaneous excursion or activity,” she says.
Pro tip: Under your budget total, include a “carry-over” category. It’s a subtle way to nudge yourself into reserving seed money for the next adventure.
Choose a Value-Rich Destination
Today’s strong dollar means affordable travel for American passport holders to many international destinations. Get the most bang for your buck by choosing a destination wisely.
Woroch says, “A strong dollar makes travel to certain locations more affordable, and can give travelers the opportunity to upgrade their experience without paying a premium…consider traveling to a place where the strong U.S. dollar will give you the most value, including Greece, Australia, and South Africa.”
Honig agrees travelers should consider the exchange rate, but adds that some desirable destinations are always affordable. “Don’t rule out a trip to Eastern Europe just because London is ‘on sale,’ for example,” he says.
Pro tip: Avoid peak times when flights and lodging tend to spike. A few weeks before and after the peak season usually means good weather, fewer crowds, and more value.
Be Your Own Best Research Assistant
Experts agree one of the biggest mistakes travelers make is not doing enough research before booking. “It’s easy to feel overwhelmed when it comes time to plan a trip,” says Honig. “But, be sure to compare airfares, hotel rates (even at the same property) and even the prices of packages and tours.”
For flights,Skyscanner is a great place to begin. Choose “flexible” as your destination and within minutes you can gauge where the biggest deals can be found. Though your focus may be Singapore, research may reveal big savings by flying into Bangkok, then hopping an inexpensive regional carrier to your destination.
Next Woroch also suggests checking Kayak for indicators of the best time to purchase a particular itinerary and flight notifications when prices drop.
With lodging, she encourages thinking beyond brand hotels, such as renting a home or room through VRBO or Airbnb.
After searching aggregators, don’t forget to visit airline and hotel websites. Armed with thorough research, you’ll quickly spot any deals reserved for direct booking.
Invest in the Dream Fund
When setting up a savings fund, Woroch suggests looking into online accounts. “Opening an online savings account is a great option as you save money toward your travel plans since online accounts offer much better interest rates compared to traditional banks (1% interest from online accounts vs. a paltry 0.01% from regular banks), and some offer the added bonus of not charging foreign transaction fees,” she says.
Feed the account by making small changes that add up to big impact. Before any non-essential purchase, ask yourself, “How will this enhance my life?” Commit to having one less coffee or lunch out a week. Fix something that’s broken instead of opting for a replacement.
Recruit allies in your mission. When your friends are going out, staying home in the name of savings, isn’t easy. Shift the dynamic by building a coalition interested in investing in their own dream funds. Rotate home dinner parties, seek out free events together, create prizes for hitting individual and collective savings goals.
Woroch suggests thinking creatively about earnings too. “Consider freelancing your writing, design or web development skills through UpWork, or pick up odd jobs through TaskRabbit,” she says. “You can also sell stuff you no longer want including clothing, gadgets, home goods, and more to earn extra money toward your trip.”
Choose Rewards that Work with You
Choosing a credit card that provides the most value for your preferred type of travel is key to stretching every dollar. The most important factors in choosing the right card include annual fees, international transaction rates, and value of points earned.
Honig says when it comes to choosing, “Think about where you want to go, what hotels you might want to stay at, which airlines can get you there and so on, and work backwards to identify the programs that work best for you.”
His go-to right now is the Chase Sapphire Reserve Card. “It has a chip, I earn 3x points on all travel and dining, there’s a $300 annual travel credit (that can even apply to Uber rides), no foreign transaction fees, and I get international airline lounge access,” he says. For Honig, the sign up bonus of 100,000 points balances out a hefty $450 annual fee.
For an overview of credit card offers currently available, check out The Points Guy’s comprehensive list, updated monthly. Regardless of the card you choose, build rewards quickly by using the card for routine purchases, from utilities to groceries, (without carrying balances over a billing cycle, of course.)
As points accumulate, choose redemption based on value, says Honig. “Save your points and miles for the most expensive flights and stays. Don’t burn 25,000 miles on an hour-long economy flight that you can book for 50 bucks,” he says. “Instead, save those miles for the expensive segments and pay cash whenever practical.”
Image: 401(K) 2012, CC-BY
Jess Simpson is a writer chasing a dream of slow travel in a fast world. This week, she’s taking advantage of a good exchange rate and hopping a cheap flight bound for Liverpool. Find her on Facebook and Instagram.