TRAVEL SAVINGS 101: HOW TO BUDGET AND SAVE FOR YOUR NEXT TRIP

I’ll be the first to admit that during my first experience living abroad, I completely underestimated how important travel savings really are. I barely planned the trip at all—and it showed in my finances. Of course, I still had an incredible time, but I quickly learned that a little strategy could have saved me a lot of stress (and a few awkward calls home).

Since then, I’ve become a big believer in treating travel savings like a plan, not a guess. It’s not as simple as skipping your daily coffee—seriously, why is that always the first piece of advice? Instead, it’s about creating a simple budgeting system that actually works for you.

In this guide, I’ll share the exact steps I use to organize my money, save consistently, and travel without draining my bank account.

✈️ In this post:

• How to set up multiple savings accounts for different goals

• The smart way to split your paycheque for bills and travel savings

• The travel budgeting trick that finally worked for me

A couple notes: I am not a financial planner, so as always, this advice is based on my personal views! Also, keep in mind I live in Canada and research comparable accounts in your country.

1. EVALUATE YOUR FINANCES BEFORE SAVING FOR TRAVEL

Start by looking at your income and your bills. There is a widely shared rule of thumb called the 50/30/20 rule that your bills should not exceed 50% of your income, and you may be living outside of your means if they consume too large a portion of your income (or at least in order to save).

Consider trying to lower any bills that are excessive, such as cell phone bills. You might want a large plan or the newest version, but would a smaller plan or your current phone get you through the month?

Now write down all your necessary expenses. Save groceries and gas, we'll touch on that later. Your Starbucks (Tim Hortons for us Canadians), clothes, and meals out do not count. Those are discretionary expenses.

2. PAY WHAT NEEDS TO BE PAID (FIXED COSTS)

Assuming you are paid bi-monthly (if you are paid weekly, adjust to reflect that), start by paying the respective portion of your bills:

• Monthly bills: pay half in the first two weeks of a bi-monthly pay period.

• Weekly pay: pay a quarter or fifth depending on the number of weeks in the month.

If you have a large future cost (property tax, annual subscription, etc.), put aside the respective portion now. This prevents dipping into your travel savings unexpectedly.

3. DETERMINE YOUR SPENDING BUDGET (FLEXIBLE SPENDING)

Now the money for your bills has been set aside. It is time to determine how much you need to live for the two (or one) week pay period. This is where you determine how much you are willing to sacrifice now to save for later.

If you are okay with saving long term, you can keep a higher budget for yourself. If you want to leave right now, then you should try your best to limit this budget to its minimum. Keep an eye on your gas and groceries spending per week, as this budget will include gas, groceries, and your 'fun' money.

I kept mine at $300 for two weeks, then eventually increased it to $400 as I developed my career. It gives me enough to survive, and to pick a few nights to do something fun when I'm going stir crazy.

4. PRIORITIZE YOUR SAVINGS (FINANCIAL GOALS)

Next, figure out what you are saving for. Travel? A home? An expensive item? You can have multiple goals, as long as you separate them. The money left over after your non discretionary bills is what you will have for saving and spending. Set up an approximate ratio based on your priorities or the goals urgency. Once you reach one goal you can set up new goals or redistribute your ratio.

5. SET UP YOUR ACCOUNTS FOR TRAVEL SAVINGS SUCCESS

It's time to organize your bank account. I utilize a lot of accounts while still only using one debit card, which means the accounts are free and that I am unable to access the savings unless I transfer funds to my primary account via online banking. I have the following accounts:

Checking/Primary Account

This account I consider my "junk account", all my pay checks begin here and I delegate my money from this account as well as using it for my spending money until the next pay period. Once money is transferred from here to savings, I cannot take it back (figuratively) and must live on the amount I have budgeted for the pay period.

Savings Account #1

I use mine for travel savings. Earns very low interest, but is set aside for the sole purpose of travelling. Again, once it goes in here it does not come out.

Savings Account #2

An emergency savings fund. Meant for only immediate and unexpected emergency costs such as vehicle repair. The goal is to build this up to ensure you have enough savings to cover 6 months of bills. Once it has that amount saved, you will still periodically add to it, and each time it reaches one thousand dollars over the initial goal, transfer the excess one thousand to car savings.

Savings Account #3

Car savings, excess money from the emergency fund will be the only money I transfer into here. Ideally, by the time a car is about to give out for good, you will have enough to purchase a new one in cash rather than leasing and increasing those fixed expenses mentioned above.

Savings Account #4

Where I put aside gift savings. Birthdays and Christmas are constants, so having a few dollars put aside here eases the burden on your spending account.

Tax Free Savings Account (TFSA)*

I would highly recommend opening a Tax Free Savings Account, or your country's equivalent. I originally used mine to put a down payment on a house, but in reality, it is good for any long term goal.

Registered Retirement Savings Plan (RRSP)*

Beginning an RRSP when you are younger will allow your money to compound over time, and will additionally offer tax benefits depending on your tax bracket.

*For these investment accounts, consider speaking with a financial advisor and / or accountant to learn more about how you can best utilize them to help you reach your goals.

Credit Card #1

Low limit for small spending, I keep mine at a five hundred dollar cap. This helps to build up your credit (which everyone should be doing!) and you are unable to build up thousands in debt.

Credit Card #2

Higher limit for big purchases This account is mostly for travel planning purposes. Most flights will require a credit card, and booking activities for other countries in advance, hostels, etc. Only put on this card what you can pay off. That means if you can't afford it, you don't use it.

6. ALLOCATE MONEY TO SAVINGS (TRAVEL SAVINGS PLAN)

When all is said and done, you should have your bills paid, your accounts set up, a bi-monthly (or weekly) budget, and a ratio of where you would like to allocate savings. So, the last step is to transfer any money above and beyond that spending budget to your savings proportionate to your ratio.

For example: if I start with $1600, let's assume $800 goes to bills and $400 goes to spending money for the two weeks. I have $400 left over to distribute at a ratio of 3:2:1 to my savings so approximately $200 would go to travel, $133 to my house fund, and $66 to my emergency savings.

Of course, you can play around with these ratios and re-evaluate as needed.

Now, the trick is that every budgeted pay period, your spending money only becomes topped up, and not added to.

So, just because I only spent $150 this week out of my spending budget, doesn't mean I can keep $550 from my next pay (in this example, my $150 left over from my spending money plus my $400 spending money for the next pay period). That extra $150 will go in the pot to be redistributed next time to bills, spending, then savings.

So you saved an extra $150, fantastic!

7. REPEAT AND REFINE YOUR TRAVEL BUDGETING ROUTINE

Your last job is to repeat this every time you get paid, on pay day. Don't wait. It will become habit and an automatic, easy process for you. I don't even think before doing it anymore because I already know where all the money is going.

*Note: I am not a financial planner, so as always, this advice is based on my personal views! Interest rates and account structures will also vary by country and bank so research what works best for you.

Building travel savings doesn’t have to feel restrictive—it’s really about creating freedom. When you know exactly where your money’s going, you can say yes to new adventures without guilt (or debt). Whether your goal is a short getaway or a year abroad, a consistent budgeting routine makes every trip feel possible.

I hope this guide helps you feel more confident about your financial planning and travel goals. If you have any budgeting tricks or travel savings tips of your own, share them in the comments below—I’d love to hear what’s worked for you!

And if you found this helpful, don’t forget to check out my other posts for more travel planning and inspiration!