On the eve of a new year, instead of a list of resolutions, how about a list of destinations you want to go — and how to get there?
Making a bucket list can often feel like daydreaming, especially with far-off destinations like Bali and the Maldives. Traveling doesn’t have to break the bank, however, and even if you’re living off a modest salary, here are the steps to take to reach your travel goals.
1. Start investing in a travel fund
Putting aside money directly into a fund for travel, particularly in an account that you cannot easily withdraw from, makes it easier to visualize goals. With new investment apps, like Acorns, for example, travelers don’t need to be a financial wizard to start investing — and grow their money faster than it would in an average savings account.
Acorns rounds up users’ credit and debit card purchases to the nearest dollar and puts that money in an investment account. Users can supplement their contributions by setting up weekly or monthly deposits into the account.
2. Automate your savings
Similar to putting money into an investment fund, automatically depositing a portion of each paycheck into a savings account makes it easier to achieve savings goals.
Miron Lulic, CEO of the finance advising website SuperMoney, told us that a savings account is the first thing someone should think about with each paycheck, budgeting the rest of your check around that amount.
“Pay yourself first,” he said.
3. Assess your current expenses — and make cuts
Figuring out where you spend most of your money already goes a long way toward figuring out what you’re doing right — and more importantly what you might be doing wrong.
Track your expenses for a month to see where your biggest expenses are, or download an app like Clarity or Mint that does it for you. Clarity gives you a list of monthly expenses, from cable and electronic bills, to streaming services. It can be a good reminder to cut out services you no longer use or didn’t even know you subscribed to, from Pandora and Spotfiy to Hulu or Amazon Prime.
4. Increase your 401K contribution
Lulic told us that one of the biggest financial mistakes people make is to immediately change their lifestyle the moment they receive a raise or a bonus. Whether you’re receiving a meager Christmas bonus or seeing a big promotion, think twice before rushing out to lease a new apartment or cut up your subway card.
Instead, increase your 401K contribution. As many employers match employees’ contribution, you’re essentially getting free money. “That mentality of saving is a big thing,” said Lulic.
While your retirement fund won’t get you to Fiji tomorrow, it will help your greater financial picture.
5. Use rewards wisely
Credit cards that earn rewards for travel expenses such as flights or hotels can be invaluable resources when it comes to making dream trips happen. The internet is full of success stories of millennials who have traveled the world using only their points from rewards cards.
These tips and tricks can be applied by travelers of all stripes. However, beware the trap of opening several credit cards at once only to find yourself weighed down by debt: First pay off balances, then go after rewards.