Prepare for Your Next Trip with Smart Savings Strategies

In collaboration with Neo Financial

Traveling can be an expensive endeavor. For instance, a round-trip flight from Canada to Mexico typically costs around $1,200 for one person, exclusive of other expenses. Costs extend beyond airfare to include accommodations and various activities. Most travel hacks help you find cheaper prices, but how do you save money to actually pay for these expenses? Some fintechs like Neo offer a range of products to maximize savings. They can help you plan and save for your trip in advance. Discover practical financial strategies to make your next travel adventure more affordable.

Strategic Trip Planning

Careful planning is essential to ensure you have sufficient funds for all travel expenses and avoid getting into debt. Create a detailed budget that includes various aspects such as flights, accommodations, vaccinations, and travel insurance. Setting specific savings goals for each item can help you manage your finances effectively. The best way to avoid confusion is by maintaining separate accounts for different expenses. In the table below, we suggest a few items to think about. Try to set a savings goal for each. 

One problem quickly arises: Traditional banks often charge high fees for multiple accounts, making it challenging to manage your savings efficiently. To overcome this hurdle, consider using a high-interest savings account, such as Neo High-Interest Savings Account (HISA), which offers an everyday rate of 4.00% and allows you to open up to 10 accounts for free.

While some expenses may have cheaper alternatives, others, like plane tickets, can be substantial. To avoid financial strain, start saving well in advance, preferably months before your trip. Sure, you can put these expenses on your credit card, but you’ll need to have the money ready as soon as you come back. Otherwise, late payments may impact your credit score. 

Use a High-Interest Savings Account

High-interest savings accounts offer a significant advantage – they provide a high interest rate on your balance. Also know that your savings are safe and secure while they’re held in a savings account. The Canada Deposit Insurance Corporation (CDIC) protects most savings accounts. 

Neo HISA, for instance, offers a competitive 4% interest rate, making it one of the best savings accounts in the country. Earning interest can contribute significantly to your savings, especially when planning a sizeable international trip.

Compare account features to make the right choice. What works best for you will depend on your priorities. For instance, some high-interest accounts offer an above-average interest rate, but you’ll have to keep a minimum balance. Another advantage of a HISA is that you can withdraw money anytime, although you may want to check if your bank limits the number of free transactions.

With a Neo HISA, you earn high-interest on every dollar and you get free and unlimited transfers. You can open up to 10 accounts to organize your money and track your goals, personalize account names, icons, and goal amounts.

How does a 4% interest rate impact someone planning a $4,000 international trip? Interests are paid on a monthly basis. For example, you could start saving 6 months before your trip by setting aside $667 every month. You would contribute to separate accounts according to your goals: $200 for transportation, $100 for accommodation, etc. You would make $2.22 in interest the first month. This doesn’t seem like a lot but it increases over time. At the time of the trip, you’ll have $4,000 in your savings accounts and earn over $13 per month in interest.

Look for Travel Benefits

Unforeseen events can disrupt your travel plans, making travel insurance a valuable investment. But you may not need to actually buy it. Premium credit cards often include travel insurance as part of their benefits. Moreover, your preferred airline’s website may display promotional offers for credit cards. Those usually come with bonus points that you can redeem for discounts on flights. However, these cards have high annual fees. Evaluate the costs and benefits of each card, weighing them against potential savings on travel-related expenses.

Additionally, consider the Neo Credit card, offering Travel Perks for $4.99 per month. This includes 2% cash back on foreign transactions, boosted cashback at all hotel travel partners, Priority Pass airport lounge access, and comprehensive travel insurance coverage from Chubb. You can cancel your Travel Perks anytime so you don’t have to pay for a whole year. 

Strategies for Affordable Flights and Accommodations

To secure cost-effective flights, use a virtual private network (VPN) to prevent airlines from adjusting prices based on your search history and location. Platforms like Kayak, Skyscanner, and Hotwire can assist in finding the best flight deals. Compare flight prices and finalize your purchase using the VPN server in the country with the lowest price.

For budget-friendly accommodations, consider alternatives like Couchsurfing, where hosts offer free stays in exchange for cultural exchange. Free options are not restricted to accommodations. You could also explore free walking tours for a deeper understanding of your destination’s history without breaking the bank. Most places have local guides offering free walking tours. Don’t forget to tip the guide to show your appreciation.

By opening a Neo HISA account and implementing these travel hacks, you can make your next adventure more budget-friendly without compromising on the experience.