That big-ticket trip to Tanzania (or Japan or Argentina), like any other major purchase, requires a bit of financial planning. Here, Jean Chatzky offers six easy steps that are guaranteed to get you the most out of every travel dollar this year. PLUS Money-saving travel tips from T+L's A-List agent.
Steven Guarnaccia Vacation Savings
| Credit: Steven Guarnaccia

l. Price out your vacation. Once you’ve decided where you’re headed and when, it’s time to figure out how much your excursion will cost. The most common approach is to look at the components of your trip—hotel, airfare, rental car, the cost of food—and add it all up. Unfortunately, many people stop there and vastly underestimate the total expense of the trip. Make a list of the other things you’ll need once you arrive: rail passes, theater tickets, or cruise-ship excursions, for instance. Make sure you consider other items, such as new luggage, activity-specific gear and clothing, and vaccinations. If you want to avoid extra charges while on vacation, consider a package that includes meals, activities, tips, and transportation. That way, there is a minimal amount of digging into your wallet once you get there.

2. Know your limits. The other way to decide on a price tag for your trip is to come up with a number you can afford and then find a vacation that fits it. For example, on Web sites such as and, you input your departure city and budget, and the sites generate a list of destinations sorted by fares. Travel agents—who know which destinations are least expensive and when—are also a valuable resource. You can go to your agent and say, "I have X amount—where can I go?" Or, "I want to go here. Can I do it with X?" Either way, a good agent can work out the details.

3. Use your points wisely. Once you know how much your trip is likely to cost, try to reduce that total by using loyalty-program points. Randy Petersen, founder of, advises booking six months in advance to increase the chance that your points can be redeemed. Try calling the airline directly. If you go online to book a four-leg trip using miles, and one of the legs is unavailable, a Web interface will probably turn you down for the entire journey. "An airline agent can point out where the bottleneck is," says Petersen, "and direct you to nearby cities that might have connections, or suggest other flights that have plenty of open seats."

If miles are plentiful but dollars are short, redeem double miles to secure a seat when all those set aside for rewards are gone. There are also programs, like United Airlines’ Mileage Plus Choices, that allow you to book a ticket on the Chase credit card affiliated with the program and then use miles—at the rate of one per penny—to pay for it. Airfares of $160 cost 16,000 miles, $400 fares cost 40,000 miles, and so on. Often you can "buy" your ticket with these programs for less than it would cost if you had to pony up double miles, Petersen points out, and he expects other airlines to follow suit. "Any time you find an airfare for less than $250, it’ll be cheaper than redeeming miles for the seat."

Consider using points from a hotel-affiliated card (rather than one from an airline), like the Starwood Preferred Guest credit card from American Express (the parent company of Travel + Leisure), which allows you to transfer points to more than 30 frequent-flier programs on a one-to-one basis. You can typically use these points at full value for airline tickets as well as hotel rooms. When you do the opposite—use airline points for hotel rooms—you generally get only half the value.

4. Pad your budget. This process isn’t foolproof. Try as you might to figure out precisely how much your vacation will cost, it’s impossible to plan for everything. The always consistent weather takes a break from consistency and you suddenly need a new raincoat. You find the perfect painting for that impossible-to-fill niche in your foyer. Or the local currency fluctuates—and not in the dollar’s favor. Something always happens. So take your overall vacation budget and build in a cushion of 10 to 15 percent.

5. Start a savings plan. Whether your goal is a new camera, a piece of jewelry, or an extravagant vacation, the best way to reach it is by slow, steady saving. It sounds obvious, but it’s worth moving some money out of your primary spending account every month and putting it someplace where it will grow faster than in a checking account. "Right now, there are more high-yield money-market accounts and six-month CD’s than there have been in a long time," says Ross Levin, founder of Accredited Investors, a wealth-management firm in Edina, Minnesota. A money-market account is a good choice if you will be accruing the money over time. However, if you’re prepared to put aside one large sum and won’t withdraw it for six months or more, you may be better off with a CD. But beware: if you need the money before it becomes due, breaking a CD will cost you three months’ interest, which will represent a big chunk of your return.

At press time, a six-month CD from AmTrust Direct, in Cleveland, has an interest rate of 5.36 percent. Some other money-market and high-yield savings account rates are slightly lower. HSBC Direct, a New York–based bank accessible on the Internet, is offering a savings rate of 4.94 percent with no minimum deposit. Go to to find the current best deals on CD’s and money markets.

6. Obtain a low-interest-rate credit card. Paying for a vacation by credit card has a number of benefits. It’s safer than carrying cash and easier than obtaining and using traveler’s checks. And, you can rack up miles and points for future trips. Just be sure that the card you take on vacation is the one with the lowest interest rate you can find. If, despite your built-in buffer, you exceed your budget, you will be able to pay it off at an interest rate that won’t cost you an arm and a leg. After the trip, take the money you were automatically transferring into savings and use it to pay off the credit card.

If you don’t like the thought of adding another credit card to your portfolio, call the ones you’re already carrying and ask for a reduction in your interest rate. If you’re the sort of customer who charges frequently, doesn’t bump up against the credit limits, and pays bills on time, they may give it to you.

The good news is that once you get in the habit of budgeting for a vacation, you’ll be able to do it not only for those vacations to come, but also for your bigger financial goals. A beach house on Barbados, anyone?

Sometimes even the best money-saving plans come up short, but that’s no reason to abandon the idea of a vacation. Below, travel agents from T+L’s A-List share their tips on stretching a travel budget.

Caribbean Getaway

Think: the more, the merrier. "In the past five years, many resorts have added units that accommodate bigger groups," Jack Bloch, of JB’s World Travel Consultants, in New York, says. "Sharing the cost of a villa or suite with four people instead of two spells big savings."

European Escape

Several countries on the Continent are still affordable, according to Judy Nussbaum at Unique Travel of Palm Beach: "The bargains are in Montenegro and Croatia." Portugal, too—even though it’s on the euro—still gives plenty of bang for your American buck.

Ski Break

"When it comes to planning an affordable ski vacation, the magic month is January," Ilene Koenig, of Santa Monica’s Let’s Travel, says. Resort prices are lower then—after the holidays but before February, when most schools in Europe and North America go on winter break.

African Adventure

Safaris and savings don’t always mix, Judy Udwin of Atlanta’s Century Travel warns, but she does recommend walking safaris. Increasingly popular in South Africa, these guided bush walks—with stays at tented camps—are a more intimate, and affordable, way to view wildlife.

Ocean Cruise

"The bar can be a very pricey part of the bill," says Margie M. Hand, of All Seasons Travel/American Express, in Montgomery, Alabama. Consider an all-inclusive cruise to avoid extra beverage charges. Regent Seven Seas recently added all-inclusives to its offerings, joining other luxury lines such as Seabourn and Silversea.

—Darrell Hartman

We applied Jean’s six steps to a 14-day Tanzanian tour (Mount Kilimanjaro, safari, Zanzibar).



Round-trip airfare (New York to Kilimanjaro on KLM)$1,555

7-day Kilimanjaro trek (including meals and tented lodging)$1,400

Accommodations (all-inclusive) 1 night Karama Lodge; 2 nights Ngorongoro Crater Lodge; 2 nights Grumeti River Camp; 2 nights Mnemba Island Lodge$3,895

Ground transport $465

Flights within Tanzania$230

Basic Total$7,545


Basic costs$7,545

Specialized clothing and gear $1,830

Digital SLR camera $1,500

Tips for safari staff and porters$405

Vaccinations and prescriptions $205


Travel insurance $221

Real Total$11,756


By using a travel agent to help modify the journey (one day less on safari, less extravagant accommodations), renting some of the gear, and getting a cheaper camera, we knocked $4,893 (or 42 percent) off the price.

New Total$6,863


Redeem 80,000 Delta SkyMiles for 1 round-trip economy ticket from New York to Kilimanjaro. Airfare savings: $1,555

New Total$5,308


Padded total: $5,308 + 15% = $6,104

New Total$6,104


To amass $6,104 in 12 months using an account with a 5 percent yield, make an initial investment of $1,000 and contribute $411 per month.


Charge $2,000 of expenses on a credit card with a 7 percent APR. By paying the same $411 you contributed to savings before the trip, you will pay off the debt in 5 months, and will incur $76 in interest.