How to save money so you can afford to travel more

Apply for a credit card with good travel benefits, save on hotel costs, fly economy, plan your trip in advance and create a holiday budget

Dubai resident Ankitha Rajendran and her husband Anand Mohan rate their holiday to Antarctica in 2019 as the most expensive so far. Photo: Ankitha Rajendran

Parikshit Balochi, a radio presenter with Bollywood music station City1016 in Dubai, has travelled to more than 90 countries since moving to the UAE in 2010, but before then he didn’t have a passport.

As a full-time employee, the 33-year-old admits he has no choice but to cut down on expenses, especially after a long and expensive holiday, to manage his monthly budget.

“I try to split my travel cost over a period of time, for instance, for a trip coming up in July, I will try to finish the flight expenses in June so that the burden of paying everything at once from my salary reduces,” says Mr Balochi, who visited Turkey, Maldives, Estonia and Switzerland last year.

“I also save everything I earn on the side in my travel fund. Travel is not cheap and so I suggest applying for a good credit card with travel benefits. It helps you split costs and reduce the burden of paying for everything at once.”

More than two years after coronavirus pandemic lockdowns nearly grounded the aviation and tourism industries globally, the sectors are experiencing a sharper-than-expected recovery in demand.

Holidaymakers plan to have bigger travel budgets this year than they did in 2021, with average spending levels increasing by about 20 per cent, according to a June survey for insurance company Europ Assistance.

Conducted by Ipsos, the survey polled 15,000 people in 15 countries.

However, 45 per cent of Americans and 41 per cent of Europeans cited financial considerations as one of the main reasons not to travel this summer, the survey found.

“Travel is not cheap and one money management tip I believe in is to try to save cost on accommodation,” says Mr Balochi, who has travelled to Albania and Armenia this year and plans to visit another three countries this summer.

“I am mostly exploring the outdoors when visiting a country. Hence, the room is good only for six to seven hours of sleep. There was this long phase of my life where I was staying in hostels, and I still do.”

Aside from saving money on hotels, Mr Balochi also cuts back on dining out in expensive cafes and restaurants, buying food from supermarkets instead.

Unless you’re going to a destination that offers an experience, such as the Santa Claus Village in Rovaniemi, Finland, or glamping in Estonia, where you can stay in a glass house in the middle of nowhere, or the Maldives, try to save money on hotels, Mr Balochi says.

He’s currently on a trip to Vienna and France, so is already trying to cut costs.

“I know people who buy new clothes and accessories for travel, but when you travel as often as I do, these are insignificant,” he says.

“I have travelled with just three T-shirts for an entire week’s trip. It also saves you baggage costs on low-cost airlines.”

Holiday ideas for foodies, families and adventure seekers — in pictures

Mr Balochi, who says his holidays to Brazil, Peru, Bolivia, Mexico and Cuba are the most expensive so far, always splits between expensive and budget destinations.

“When I say expensive, I mean a faraway destination where airfares cost you more to reach. That holiday is always on my annual leave where I usually take three weeks off,” he says.

“I have no travel preferences. I want to explore everything and travel everywhere. I usually try to do shorter-haul flights on the long weekends.”

He plans to travel to Australia, New Zealand and Canada next year.

Before you imagine yourself staying at that dream hotel, you must start your journey by examining your current financial situation, by determining your net worth (total assets versus total liabilities), says Joseph El Am, deputy general manager at digital wealth manager StashAway Mena.

Review your savings and ensure you have sufficient funds to book accommodation and flights, making sure you still have surplus for spending money, he says.

“If you have any existing liabilities, realistically review your payback plans and when they will allow you to start saving for a holiday and to what extent,” Mr El Am says.

“Remember to be realistic and analyse when and where you can travel to, and if you will have sufficient funds afterwards.”

It’s imperative that you keep your finance goals to the fore and consider what you need to do to achieve them, he says.

If you have any kind of high-interest debt, such as a credit card loan, make sure to prioritise the allocation towards that. Additionally, make sure to build a safety net of six to nine months’ worth of expenses, which will come in handy during uncertain financial periods, Mr El Am says.

Once you understand your financial situation, you can begin budgeting for a holiday, but make sure to do this in advance and allow plenty of time to save, he says.

“You should know exactly what amount of savings you need to put aside each month,” Mr El Am says.

“When it comes to booking flights and hotels, never leave it to the last minute. Airlines and hotels raise their prices closer to your travel date, so be sure to factor this into your savings plan. Consider buying a package deal between flights and hotels to reduce costs.”

Sometimes on-the-ground transport can be overlooked while planning for a trip. Do your research and check if it makes sense to rent a car, use an Uber or local public transportation, Mr El Am says.

Travelling during off-peak seasons is another good way to save money, says Sophia Bhatti, a chartered wealth manager in Dubai.

Avoiding tourist-heavy months means hotels and flights will be cheaper. You’ll also deal with fewer crowds and shorter waits for any attractions you may visit, she says.

It is also important to create a spending budget before the trip.

“You can set up spending limits before you travel, this may deter you from making expensive choices. Keep track of your spending during the trip and make sure you do not exceed your budget,” she says.

Consider subscribing to reward apps or even credit cards that provide cashback benefits, airline points and even leisure and food and beverage discounts, but make sure to use them mindfully and moderately, Mr El Am says.

Do your research as many have fees attached, but always make sure the fees and the benefits work for you and your plans, he says.

Ankitha Rajendran, a 33-year-old group marketing manager in Dubai, who has visited 60 countries across seven continents, and her husband Anand Mohan, a material planning manager, prepare a budget and set aside a portion of their incomes towards investments, rent, monthly utilities, emergency funds and travel — in that order — at the beginning of each year.

“This helps us understand our cash flow situation and gives us peace of mind knowing that there is a safety net,” says Ms Rajendran, who’s travelled to 10 countries so far this year and plans “to hit a few more unconventional gems before the end of the year”.

“My number one advice would be for people to set aside funds worth six months of their average monthly expenses before planning frequent trips. Do it diligently.”

She also recommends people who are just starting out with travel to go slow and tick off the easy destinations that are closer to the UAE and can be covered over a long weekend.

This will help you to understand the areas you tend to spend more on when on a holiday, so you can cut back if you wish to, she says.

Ms Rajendran, who moved to Dubai from the US in 2015, says her Antarctica holiday in December 2019 was her most-expensive trip, while the least expensive, “but memorable trips”, include Georgia, Armenia, Kyrgyzstan, Vietnam, Nicaragua, Guatemala, Serbia and Albania.

Have your travel plans sorted at least four to six weeks in advance rather than researching a country as the holidays get closer, says Ms Rajendran, who travelled to 10 countries across five continents last year.

“Especially with the current situation of increasing travel costs and visa complications, you should ideally get the flights sorted first, followed by budget, hotel booking and the itinerary,” she says. “You will definitely save more if you travel off season.”

The couple do not cut down on expenses in their day-to-day life to allocate more money for travel, she says.

“We are not big on shopping or eating out often. We wear our old clothes a lot and buy probably a couple of new items a year,” Ms Rajendran says.

The duo have a monthly travel budget as well as one for the year. Some trips cost more, while some are less.

“It all depends on where we are going and how much time we have, so this is a shifting trend but we are always aware of what the upper limit is going to be,” Ms Rajendran says.

The couple try to minimise flight costs by taking longer routes and flying economy if it will save them a few thousand dirhams. They also spend less on hotels, especially in places where they are unlikely to spend more than a few hours in the room.

To keep costs down, they also avoid expensive meals.

“We are conscious eaters. For instance, if we eat out once a day, then we shop for basic groceries like fruit, milk, yoghurt and bread for the evening. This helps bring the trip costs down significantly in places that are otherwise expensive,” Ms Rajendran says.

“We do many activities on a trip, so I would say we spend the most on finding a great local guide and the unique activities in the country.”