Finance – Saving to travel
We’d all like to see the world or explore our beautiful continent. It’s just that money’s so tight! But experts tell us we can travel as much as we want if we save a little each month towards that vacation.
Going on a relaxing holiday is part of mind, soul and body refreshment. It helps us create lifetime memories, especially when we do it with friends or family. Travelling reduces stress, but it’s one of those important things that we always push to the bottom of the budget list and never get to do because “we can’t afford it”. True, you cannot travel on empty pockets. You need to have some cash to hit the road.
Samantha Petersen, a financial advisor from Stringfellow, says: “There are many ways to save for travel, depending on how much time you have.” She recommends starting your own travel fund as soon as possible to ensure that you are debtfree after your adventures. A travel fund is not an account or investment plan, nor is it provided by financial institutions. It’s something you create yourself; money that you put aside with the aim of using it to travel.
“Depending on how you want to save for your trip, your travel fund account should be separate from your everyday savings account as you do not want to end up ‘borrowing’ money from it,” says Petersen.
Travel experts advise that it’s best for you to decide whether you want to travel soon or much later, so that you can plan your vacation. This will help you decide on how you’re going to save. “The longer you’re in the market, the more time you have to earn interest,” explains Petersen. “Remember that you earn compound interest on investments, which means that the interest is added to the investment amount, and the interest for the following month is calculated in this amount.”
She recommends speaking to your financial advisor about how much you should save every month, depending on how much you earn, and where and for how long you want your vacation to be. “Have automatic transfers made to this account so you don’t miss payments. Regardless of how soon you want to be on the road, whether in three or twelve months’ time, this will ensure that you’re one step closer to your goal.”
Annette Bygrave, a travel agent at SynerG Global Travel, says the question of how much you should save every month depends on where you want to go and for how long. “It’s always best to contact a travel agent to find out about the best deals ahead of time and then start saving based on that information. Anyone can take a vacation if they booked well in advance as this will ensure availability and better pricing,” says Bygrave.
SHORT-TERM TRAVEL
Short term in this case means if you want to travel in three months’ time or less. You may not have saved much to travel in December, but you can still have fun.
Where you can go: You can have a great vacation by taking a Sho’t Left – a road trip around South Africa’s provinces. Find the deal that suits your pocket, says Pentravel travel agent Willicia Jacobs. “South Africa is a beautiful country with so much to offer. We have beautiful beaches, fantastic nature reserves and the Big Five, which you can see on safari. You’ll get amazing views of the Mother City from the top of Table Mountain; taste some of the best wines on the Garden Route; learn about the history of the battlefields in the Drakensberg in KwaZulu-Natal, and so on. South Africa offers unique activities that no other places in the world have. You can do a short trip or take your car on a longer road trip for a few weeks.”
Your travel fund: Money for your travel fund during this short time can come from different sources:
Clean out your garage: “There are probably items like old computers, games, chairs or clothes that you no longer use. They’re just collecting dust in your garage or closet. Have a backyard sale or take these items to the pawn shop and negotiate what they’re worth. You’d be surprised at how many people could find your junk useful,” says Bygrave. Consider group travel: This is useful if you’re planning on travelling very soon and don’t want to compromise on your holiday. Speak to a few friends about taking a holiday together and all of you putting money into the travel fund. The more money there is, the more interest you’ll earn, and there’ll be fewer expenses on the trip because all costs will be divided among all of you. “This way, you’ll drive in one car and get to save on petrol,” says Bygrave. “You can also get discounted package deals on group stays. Not
only will you be sharing costs, it’s also fun and safe to travel in numbers.”
MID-TERM TRAVEL
Saving for a trip you want to take in six months’ time or later means you could even travel across African borders.
Where you can go: “Africa and neighbouring islands have so much to offer. There’s the Victoria Falls in Zimbabwe or Zambia, or you can do wildlife tracking in Uganda to see the gorillas there, or sip on cocktails while your partner snorkels and your children build sandcastles on our beautiful islands in Mauritius, Zanzibar, Reunion and Seychelles. These are just some of the experiences you can enjoy,” says Jacobs.
While all these destinations guarantee a memorable time, Jacobs advises that you still need to do your research about where you want to go. “This is important because there may be extra costs involved in going to your chosen place, such as having vaccinations, paying for visas, etc.”
Your travel fund: Money for this fund can come from these sources:
Pack your own lunch: Forget takeaways. That R50 you spend in the canteen every day amounts to R6 000 over six months if you minus weekends and count the 120 days you would have been at work in those six months. Multiply that by R50. “It’s a lot of extra money that could be used on something memorable,” says Amy Heydenrych, a writer on an Absa inhouse blog. Cut your extra costs: If you pay R400 per month on a gym membership, that amounts to R2 400 in six months. Subscribing to Premium DStv amounts to R4 800 in six months if you pay R800 per month. Jogging or exercising at home will save you money, and so will sacrificing pay-TV.
LONG-TERM TRAVEL
Long term means saving for more than a year, even for two or even three years, depending on how much you can afford to save per month and where you want to travel to. This will require dedication and discipline as it’s easy to get tired of waiting.
“Being disciplined is very tough when it comes to saving. You need to ensure that your savings come off your account each month as a debit order and that you are not tempted to use it. You need to set clear goals and stick to them,” says Petersen.
Where you can go: This trip is to your dream destination. You can go as far as you want. Go see the museums in New York, the Eiffel Tower in France or the Machu Picchu montains in Peru. Be part of the Berlin Film Festival in Germany or take a walk in the streets of legendary cities like Rome, Florence and Venice in Italy.
Your travel fund: Because you have time, there is lots you can do to save for this trip. But remember that this could be your most expensive trip. “Don’t forget about airport taxes, visa costs, tourism tax at hotels in different cities all over the world, and health requirements such as vaccinations,” advises Jacobs.
Get a part-time job: Use your expertise and skills to make some extra money on weekends or after work. Take up waitressing or tutoring, or bake cookies and sell them at work or in your community.
Join a stokvel: Stokvels are known to be a convenient way to put away money for whatever needs you might have. You can join a registered stokvel for group travel or one where money is shared at the end of the year. Also, the money you’ll save as a group will have greater returns because it will be a greater amount than what you will save as an individual. If you can’t find a stokvel, why not join a travel club?
Get rid of bad debt: Sonia du Plessis, a financial advisor at Brenthurst, advises that you start a travel fund once all your short-term debt is settled. “This includes credit cards, store accounts and negative balances on your overdraft. You get charged interest on these debts, and if you take longer to settle them. By the time you’re done, you would’ve paid double or even triple what your initial debt was on some of them.”
Settling debts means all the money you’d been paying off can now go towards your travel fund and earn you interest. “If you’re travelling in less than three years’ time I’d recommend a savings account with a fixed interest rate, especially in today’s volatile market. When opening such an account, ensure you are earning above 6% interest as there’s also inflation to take into account,” says Petersen.