How To Build A Travel Fund

Budget Breakdown: Break down your travel budget into categories such as flights, accommodation, food, local transport, and emergency funds. This will help you set a realistic savings goal for your travel fund.

Timeline: Set a deadline by which you want to achieve your travel goal. Having a timeline adds urgency to your savings plan and helps you measure your progress.

High-Yield Savings Account: Choose a high-yield savings account specifically for your travel fund. This ensures that your money grows over time, and keeping it separate from your main account prevents accidental spending.

Debt Fund/Overnight Funds: If your intended travel is couple of months away, it is best to put the funds in a Debt Liquid Funds as they will provide a better return and is easily withdrawable to meet the needs, you can withdraw these partially to meet the immediate expenses such as booking a flight ticket and the rest keep it there until the need arises.

Mutual Funds: This is my favourite way of saving up for the travel, I usually plan well ahead for an international trip, as these would really need a lot of money to cover for all the expenses. To facilitate plan the trip well in advance, these are best if your intended travel is a year or more away. Treat it same like an investment and diversify across different schemes to mitigate any volatility. Since the timelines are distant the chances of getting good returns is a possibility. For optimum results do not mix these with your regular investment avenues but rather choose with a bit of risk to reward ratio.

Recurring Deposit (RD): Set up a recurring deposit in your bank specifically for travel. RDs give you a fixed interest rate and help you save systematically without touching your other investments.

Fixed Deposits: Consider short-term investments Fixed Deposits with a short lock-in period. This ensures that your money grows while still being relatively accessible for your travel needs.

Automate Transfers: Set up automatic transfers to your travel account or SIP’s to your favourite Mutual Funds on a weekly or monthly basis. Even a small amount, like ₹1,000 or ₹2,000 per month, can add up over time without causing financial strain.

Expense Tracking: Keep a track on your expenses. Identifying small, unnecessary expenses can help you divert funds to your travel savings.

Lifestyle Adjustments: Make small lifestyle changes that have a big impact over time. For example, brewing coffee at home instead of buying it at a café, or opting for budget-friendly entertainment like streaming movies instead of going to the theatre.

Sign-Up Bonuses: Look for cards with sign-up bonuses that can translate into free flights, hotel stays, or other travel perks. However, only use this strategy if you’re financially disciplined enough to pay off your credit card in full each month.

Sell Unused Items: Declutter your home and sell items you no longer need on platforms like OLX or Facebook Marketplace. This not only frees up space but also provides extra cash for your travels. A golden thumb rule is if you haven’t use an item for the last 6 months, probability of you using them in the future is less.

Freelancing: If you’re passionate about sharing your knowledge, consider offering tutoring or online classes, assisting small businesses with tax matters, supporting cloud kitchens, or even becoming a home baker. When you have a passion and a solution to a problem, it becomes easier to leverage your skills as a unique proposition.

Sign Up for Deal Alerts: Use platforms like Skyscanner, Kayak, or Google Flights to set up alerts for cheap flights. Being flexible with your travel dates also helps you grab the best deals.

Prioritize Financial Security: Only use money specifically set aside for travel, ensuring that your overall financial security is not compromised. Your emergency fund and investments should always remain untouched.