Last Thanksgiving, Capital One 360 had a great Black Friday special: open a checking account, make 5 debit card transactions within 45 days of opening, and receive a $125 bonus. Not wanting to be one that turns down free money, I gleefully signed up – and, in doing so, opened my first travel savings account.
My main reason for opening up a travel savings account was simple: I got tired of being forced to create a budget around the adventures I want to realize every year. And, over time, I wanted to have the cache (pun intended) to travel as I pleased, without worrying about how I’d pay for it or charging it against a credit card.
So far in 2014, I’ve been able to have guilt-free escapes to London, Dublin, and numerous road trips across the Midwest. Next on the list is Louisville (again), Toronto, and a week in Germany – all funded from my travel savings account. If you haven’t opened up one yet, what’s stopping you?
Ready to get started? Here are my three steps to get started down the road to building up a traveling nest egg today:
Open the travel savings account already!
This may seem like the obvious first step, but you can’t start saving without an account. I recommend finding an account that will allow you to move money from your main accounts (if necessary), and allow you to have easy access to said money. I opted for the Capital One 360 not only for the extra bonus, but because Capital One 360 has no international transaction fees (aside from the conversion rate), and no foreign ATM fees! The only downside is that you must notify Capital One before you travel internationally, but that is as simple as filling out a web form. Be sure to search around – both locally and online – for the best account opening bonuses. For instance: Chase is currently offering up to $400 $500 for opening a new account. (H/T: Doctor of Credit)
Set a travel savings account plan & savings goal
Remember when you were a kid, and worked all summer to save up for that brand new bike? The principals remain the same today: to get to what you want, you need to set a goal, and create a plan to get there. I started by directly depositing $100 out of my paycheck into my travel savings account with every bi-weekly paycheck. In addition, half of all my “ancillary” income (from consulting, freelance work, holiday gifts, etc.) goes straight to the savings. Sure, it means I can’t go out to lunch as often as I like, and can’t do drinks twice a week. But it is so worth it when I spend that extra weekend in California.
Get creative with how you fund your travel savings account
Kenny at Miles4More (another happy member of the Saverocity family) recently outlined how to build up your travel savings account using points and creative (read: manufactured) spending. While this may not be for everyone, it can be a relatively easy way to diversify your savings plan. With a little know how, a good cash-back credit card, and some creativity, it’s a relatively cheap and easy way to start saving for the travel you want to do!
Have you opened up a travel savings account? Are you planning to open one up? Let me know your travel savings account questions experiences in the comments below!
Great post! We actually got a $500 Chase offer in the mail, so watch your mailbox. I looked more at using virtual currencies than an actual bank account in my post, but not everyone wants to open that many credit cards or do that much MS. So it’s good to look at different strategies from different viewpoints.
Great suggestion to your readers, and I am happy that you are doing it as well! I did exact same thing 7 years ago, every 2 weeks a portion of my paycheck goes into a specific account, over months it builds up and when we hit the road (or the plane trip) i just take the money out of that account to cover all expenses. Same goes for all of those taxes/fees associated with award travel, car rentals, hotel stays, etc. Definitely smooths out your budget over the year.
Per my earlier post a while back, you should consider having these accounts for insurance, clothing, gifts, automobile, etc… treat your personal life like any other major company’s balance sheet and accounting statement that allocates its money into buckets or special capital/expense accounts.
Cheers,
PedroNY
I have an account where I put in all the money I get from “deals” I find (like this week’s free money at Staples). Then I use that to pay for things like Vanilla fees, or annual fees, etc.
Excellent post. I happen to like the Fidelity 2% cash back Amex, so I have that going into a separate account. Cash back on every day things funds the cash portion of travel that way. I use that card when I buy in a non-bonus category, so I end up with a decent mix of actual cash and points.
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