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How to Pay for Your Dream Vacation

Last updated Jun 4, 2024

We could all use a little rest and relaxation once in a while. While the idea of a vacation may be peaceful, the thought of paying for a vacation may not be. Still, you can pull off a dream trip with a little finesse and some budgeting know-how. Here are some tips that can help you pay for your dream vacation.

beach with two chairs on it facing the ocean

1. Make a plan

Don’t go into your vacation without doing your research. Make a concrete plan for where you want to go and what you want to do when you get there. This will make it easier to determine what you need to pay for and how much it might cost. 

2. Start planning your trip early

The earlier you begin planning your vacation, the more time you’ll have to save for it. You may also be able to save on flights and other travel necessities by making reservations in advance. As an added bonus, the more you plan ahead, the more time you have to look forward to your trip.

3. Figure out your priorities

Deciding what matters most will show you where you should allocate more money. For example, if you’re going on a honeymoon, you and your partner may choose to stay in romantic, splurge-worthy accommodations, or you may want a generous budget for new and/or exotic foods and drinks if you’re a foodie. Remember that this is a personal decision and the only opinions that matter are yours and those of your traveling partners.

4. Create a “splurge fund”

You may be familiar with the concept of an emergency fund, or a savings account specifically meant to help you handle financial emergencies like unexpected expenses or a sudden loss of income. But it’s just as important to save for fun things like vacations. Think of this as your “splurge fund”. Not sure how much you need to save? Start with a list of all costs you know your vacation will include, such as: 

  • Transportation (e.g., airline tickets, gas, rental cars)
  • Lodging (e.g., hotels, vacation rentals)
  • Entertainment (e.g., ticket costs, entry fees)
  • Estimates for food, drink, souvenirs, and incidentals

Assign a dollar amount to each, then add those amounts together. The resulting sum is what you should strive to have in your splurge fund by the time your vacation rolls around.

Building a big enough splurge fund requires two things: reducing costs through careful budgeting and storing your money in an interest-bearing account. Additionally, look into a Premier Savings account through Upgrade to see how you can earn an exceptional APY on savings over $1,000. You might also consider a Rewards Checking Plus account, which offers cash back on everyday purchases and no monthly fees.

5. Make it as affordable as possible

Paying for a vacation doesn’t have to be out of reach.Proper planning can help you save a lot on your vacation, and it doesn’t stop there. Use these tips to make the cost of a vacation more manageable. 

Look into payment plans

Some travel agencies will allow you to pay for a vacation in installments, sometimes with interest and sometimes without. You’ll likely need to provide a deposit upfront, but the rest of your trip will be divided into increments you can pay over time. Third-party loan providers like Upgrade can also help with vacation loans that break large costs up into smaller, more manageable monthly payments. Check your rate now with no obligation and no impact to your credit score.

Travel during the “off-season”

Most major tourist destinations have an “off-season,” or a time of year when travel is less busy. Not only are prices on airline tickets and hotels often lower than they are during “peak season” (i.e. the time of year when people travel the most), but you’ll likely see fewer crowds and be able to get into more destinations and experiences. What qualifies as the off-season varies depending on where you’re going - for example, November through March is the off-season for most European countries, while Southeast Asia’s is June through October. Do some research to figure out the best (and cheapest) time to travel to your desired destination so that paying for your vacation is within reach.

Take advantage of credit card rewards and perks

With more rewards cards available today, you can use credit cards to generate rewards. These credit card rewards mostly fall into three categories.

  • Cash back: Cash back cards give you a percentage of your card usage back in the form of cash rewards. The best rewards cards can offer 2% cash back or even more. For example, you could earn up to 3% back with Upgrade Life Rewards when you pay back purchases in qualifying categories!
  • Store credit: A store credit card works similarly to a cash-back card, with one key difference: rather than giving you rewards in the form of cash, they reward you with “store credit” you can redeem at specific retailers. 
  • Travel rewards: Travel rewards cards typically give you “points” that you can exchange for travel like hotel stays, airline tickets, or even all-inclusive travel packages. 

As long as you pay your cards off on time and avoid racking up unmanageable debt, a cash-back card or travel rewards card could help offset some vacation costs. You might even consider having a “rewards only” card that you make transactions with and then pay back quickly to avoid accumulating interest. (Note that you should only do this if you feel confident in your ability to maintain good spending habits and make your payments on time.) Use our guide to choosing a credit card to find one with credit card rewards that fit your needs, lifestyle, and budget.

With careful planning and these tips for cutting costs, you can make your dream trip a reality. Bon voyage!

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