The best way to save is by first cutting down expenses. If you haven't already, check out My Top Five Things You Can Stop Spending On To Travel the World.
Go ahead an open a new savings account. I recommend you look for an account with a high annual percentage yield (APY), which is what the bank pays you! You want to make this a rewarding process after cutting down on your spending right? Let them pay you!
In addition, online banks such as Ally Bank typically have high APY rates. Click here to learn more about banks with high APY rates.
So the key is to put aside the difference of what you cut down into your savings account. Let's say your cable bill was $100 per month and you were able to cut it down to $50 per month. Put the leftover $50 in your travel savings account every month. In one year you would pay for your cruise!
1 month $50
3 months $150
6 months $300
12 months $600
Let's say you were able to cut your $141 cell phone bill by switching to Cricket Wireless, paying $35 per month with the $5 autopay discount (I should get paid for this). Go ahead and put leftover $106 into your travel savings account. In one year, you can afford a nice trip to Europe!
1 month $106
3 months $318
6 months $636
12 months $1272
Let's combine the cable savings and cell phone bill savings, $50+$106= $156. Your savings account would look like this:
1 month $156
3 months $468
6 months $936
12 months $1872
Play the music! You're going on a family vacation!
My Do's and Do Not's
Do not combine your travel savings with another you already have for a different purpose. Yes that means your checking, or your Christmas savings etc. It'll be hard to track. And you'd definitely will be tempted to over withdraw.
Do not open your travel savings account in the same bank institution you currently use. You'd want to make it inconvenient to withdraw just in case you feel the urge to splurge! Seeing all that money build up will make you ponder on ways you can spend it. That cute purse, or that nice dress you seen at the store. Yeah, don't do it!
DO set up an auto bank transfer and forget it is there until you are ready to plan your next vacation!
DO practice self control. They only reason to reach into your travels savings accounts other than for your next vacation, is for emergencies. The real emergencies that can affect the livelihood of yourself or family. By restraining yourself from reaching into your savings account, you'll find other unique ways to cut down. Don't go to Tim Horton's for two weeks. Pass up on going out for a couple of nights. Drink water other than a soft drink at a restaurant. Or order from the appetizer menu. Or eat cereal at home (I practice this alternative quite often haha). Be strong! Have self control!
Please read, Like A Money Machine, to find out how I also used credit card reward points to fund my Houston, Texas trip!