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How to Start a Vacation Fund (The Ultimate Step-by- Step Guide!)

It can be hard to save for vacation when you have other expenses to worry about, but it’s not impossible. In fact, there are many different ways to get started. Saving for a vacation doesn’t have to be difficult or time-consuming — it just requires some organization and determination. Here’s how to start a vacation fund and save up for your dream vacation.

How to Start a Vacation FundHow To Set Up A Vacation Fund

Your initial question is likely, “How DO I set up a vacation fund?”

So first off, let’s talk about how to actually set up what will become your vacation fund. You’ll want to either set up a separate bank account or create a “bucket” for your savings.

If you find yourself spending your savings, or dipping into accounts when they’re easy to access, consider starting a bank account that’s harder to access.

If you can add an extra account or option to save separately in your bank account, and feel comfortable doing so, you can take this route.

For example, some banks offer “envelopes” so you can separate your savings account balance into multiple areas of savings. If yours does this, you can create your vacation fund that way.

Related: How to Save On Your Vacation

Where do you put travel funds?

What if you need additional money for your trip? Where do you put your travel funds?


I would highly suggest putting your travel funds in a savings account — preferably one you can’t really touch until it’s time for the actual vacation.

How does a vacation fund work?

A vacation fund is just money that you’ve saved and earmarked to spend on a vacation.

This includes:

  • flights
  • transportation
  • lodging
  • food
  • and more!

It helps you manage money better while relaxing, and also keeps you from overspending or stressing about money while traveling.

Related: Cheap Vacations: How To Save Money On Your Vacation Rental

How much money should I put in a vacation fund?

When you think about how much money you should put in your vacation fund, it’s important to be realistic about where you want to go, what you want to do, and how long you have to save.

For example, if you plan on vacationing on the cheap and backpacking across the area you plan on visiting, most likely your most expensive part of the trip will be your flights. If you want to go on an all-inclusive cruise, you won’t have to budget for food. But, if you want luxury hotels and Ubers everywhere, you’ll need to save significantly more.

Keep in mind these things you need to save for:

  • Food
  • Lodging
  • Transportation
  • Flights/Cruise/Train tickets
  • Souveniers
  • Nomad health insurance (if traveling overseas)
  • Tip money
  • Incidentals

That way, you can budget more carefully for the money you will need.

Related: I Just Took a Three Day Vacation for Less Than $65 (Including Gas)

What is the Interest on a Billion Dollars Per Year?What is a reasonable vacation budget?

The average American spends about $1,500 on a vacation. Of course, you could get by on less than that, or spend significantly more. It’s important to save for what you’ll need and want on vacation, which can vary from place to place and person to person.

How much should a family of 4 spend on vacation?

Another question you likely have… “How much should I put in a vacation fund for a family of 4?”

If you look at the above cost for an average person, you’ll see that a family of 4 would most likely need around $6,000 for a one-week vacation. And you’d be pretty close! The average family spends around $5,500 on vacation.

Related: 4 Tips to Save Money on Vacation

Can you finance a vacation?

Wondering if you can finance a vacation?

Well…you can, but I’d advise against it.

  • Why get into debt over something you’re only going to experience once?
  • Do you want to be paying for it (potentially) years later?
  • And, are you willing to pay extra over time, just for the convenience of saying you got to finance a vacation?

If you do choose to book a vacation on a credit card, make a plan to pay it off asap. But, I strongly recommend saving for your vacation in advance.

Related: How To Manage Your Finances With Sinking Funds

How To Start A Vacation Fund & Start Saving

Want to start a vacation fund? Good for you! Here’s what we’d recommend doing to make it a complete savings success!

Pay Yourself First

First of all, pay yourself first. This means automatically depositing a set amount into your vacation savings account each month.

For example, say how much you want to save is $1,000. Each week deposit at least $5 into your vacation fund until the end of the month, and take out any money that you spent out of your checking account or debit card.

Also, remember how much money you save now will determine how quickly you can take your trip. You don’t want to make sacrifices that will prevent you from reaching someplace amazing. So be sure to consider how many hours you’re willing to work each week at your current job in order to save more.

Related: How a No-Spend Challenge Can Work For You

save money to travel quicklyUse Travel Rewards Credit Cards or Other Points

Saving for a vacation can be difficult, but it’s not impossible. One way to make it a bit easier is to use a travel rewards credit card.

Travel credit cards allow you to earn points for every purchase you make, which can then be redeemed for travel-related expenses.

This can include…

  • airfare,
  • hotel stays,
  • and even car rentals.

The best rewards programs with credit cards are typically American Express Membership Rewards and Chase Ultimate Rewards.

Both of these offer incredible flexibility in redeeming your rewards either through vacation bookings or cashback. If you’re not sure which card to choose, take a look at some of the best travel rewards credit cards on the market.

Some of these cards offer sign-up bonuses worth hundreds of dollars, as well as other perks like free checked bags and priority boarding.

Another option is to use an app that allows you to turn your everyday spending into travel rewards. Both Ibotta and Checkout 51 are great options, as they allow you to earn cash back for every purchase. If you’re looking to save up for a Caribbean getaway, this could definitely help with that.

Related: The Best Travel Credit Cards In 2021

Sell Your Extra Stuff

If you have too many things sitting around the house, they are still costing you money. That’s because you’re paying monthly bills for appliances, furniture, and other items that are typically used only within certain time periods.

Instead, sell your extra or underused items on Craigslist or eBay to recoup some of those costs. Then, save the money from those sales as your vacation fund. It’s as easy as it sounds, and it’s a great way to kick start your vacation savings plan.

Related: Second Income Ideas For Quick Cash — In Just A Few Hours A Week!

frugal Christmas gift ideasBuy Discounted Gift Cards

Sometimes you can save big with discounted gift cards. For example, Cardpool offers discount gift cards for hundreds of popular retailers – including restaurants, department stores, and more.

You can save a lot of money by shopping this way.

Create an Actual Vacation Fund Jar

If you’re looking for an easy way to start saving for your dream vacation, consider setting up a vacation fund jar. Having the tangible money saving up in front of you is a good motivator to keep you going on your savings journey for your next vacation.

Here’s how to do it:

1. Decide how much money you want to save each month.
2. Figure out how many months it will take you to save the desired amount.
3. Pour that number of months’ worth of savings into a jar or container.
4. Start putting your spare change and any other money you want to save
towards your vacation fund into the jar each month.
5. Watch your fund grow!

This is a simple and easy way to get started with savings and to visualize how close you are to your dream vacation. By having a written goal in front of you, it can be easier than you think to start saving for your trip.

Related: Things You Shouldn’t Sacrifice To Save Money

finding the best dealsMonitor Trip and Flight Deals

One of the best ways to save money on your vacation is to monitor cheap flight deals.

There are many websites and apps that offer these deals, so you can find the best one for you.

Some of our favorites include Google Flights, Skyscanner, and Hopper. These sites allow you to input your travel dates and will notify you when there is a cheap flight deal that matches your criteria.

Another great way to save money on flights is to sign up for airline newsletters.

This way, you’ll be notified when there are special deals or promo codes available. And don’t forget to check with your credit card company — many of them offer travel rewards that can be used for plane tickets.

Final Thoughts: How To Start a Vacation Fund

Now that you know how to start a vacation fund, it’s time to get moving on it! There are many different ways to save for your dream vacation, and we’ve explored a few of them here.

But don’t stop there! Keep looking until you find the method that works best for you. And most importantly, don’t forget to have fun while you’re saving. After all, you’re working towards a goal that will let you relax and enjoy yourself in the near future.

You were wondering how to start a vacation fund. Now you know. Time to get started on it so you can have the time of your life!!

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AUTHOR Kimberly Studdard

Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.

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