Saving for a big trip - mattress or savings account or what?
July 23, 2016 7:35 AM   Subscribe

There are early rumblings that my cousins might start planning our next family reunion (an every four years thing) in Italy for summer 2018. How can I best start saving now to make this a possibility for me, a person of modest means?

Several of my cousins have traveled a few times around northern Italy - in and around the place where my great-grandmother emigrated from in the early 20th century. I've always wanted to go, the family history is a cool connection, and my cousins are experts at the logistics. We're not a wealthy family (I'm one of the poorer relations too) but this might be a possibility for our next reunion. Typically we meet at midwestern resort kind of place.

Assuming all the family factions come to agree on this (a big if), I think this might be a great opportunity to travel to Italy. My cousins know where to stay, how to rent a car and drive, etc. I've traveled abroad a bit, but never to continental Europe. And I am a single mom with two kids - making this trip with some adult family members who have "travel skills" would be ideal.

This would definitely be a budget stretch for me. I'm anticipating improving my financial situation shortly (finishing a graduate degree next month finally and getting a "real job" lord willing)....but I will need to be a diligent saver in order to manage this. It will involve 3 round-trip air fares and probably a week's lodging and expenses. I'm thinking somewhere in the neighborhood of $8k is what I will need.

There are online savings tools that can give me some ideas of what I need to put away monthly, but is there a better vehicle for saving money than my credit union savings account? I think the interest rate in that is like 2% or something. Has anyone done something like this successfully and have any advice?

posted by pantarei70 to Work & Money (12 answers total) 1 user marked this as a favorite
How old are your children? Most airlines will let infants under 2 ride in your lap for just the cost of the taxes. Not an optimal solution for an overseas flight, but it would take a huge chunk out of your airfare cost.
posted by JoeZydeco at 7:56 AM on July 23, 2016

What a wonderful opportunity! Are your kids excited about this trip, too? If so, how about discussing ways that you can save together and creating a plan. Together you could also learn some Italian phrases, watch a film set in Italy on Netflix, study Roman history, etc.

In addition to your saving as the parent, you could make a goal to reach together and make a visual chart to track progress. For example, if you get pizza once a week, you could agree to make it every other week and, on the usual pizza day, put the $20 saved in the bank and add it to your chart's total. For birthdays, let's say they get $100 of gifts: they could decide to put $25-50 of that towards the trip fund. While you don't want to shake down family and friends for money, perhaps you could find simple ways to earn some extra cash, such as by gift wrapping during the holidays, having a lemonade stand in the summer or doing a yard sale. If your kids are old enough to work outside the home, they can get a job or do things like babysitting and shoveling snow to raise money.
posted by smorgasbord at 8:02 AM on July 23, 2016 [2 favorites]

Best answer: For any money you'll need in the short term - and 2018 is definitely short term - you can't do better than a "high-interest" savings account which, if you really do get 2%, would be excellent. (Most top out at 1% these days.) This is unsatisfying and annoying, but when it comes to money, risk and reward are tightly linked. There is no way to get more than minimal rewards without taking on real risk, and you can't take risks with money you'll need soon. Your success in achieving this goal will be pretty much entirely dependent on your ability to put aside $8K over the course of the next two years, and pretty much independent of the vehicle you store that money in, which should be a really boring 1%-ish savings account that will basically buy you a nice dinner with all the interest it'll 'contribute' between now and then.
posted by Tomorrowful at 8:03 AM on July 23, 2016 [5 favorites]

If you don't already have a clear monthly budget, I would consider getting YNAB (or you could use Mint). This is a great way to get a picture of your finances and to track your vacation savings. I might also explore options like credit cards that help you accrue airline miles to defray the cost of your plane tickets. We use a card like this for our groceries and gasoline, and we pay it in full every month.
posted by katie at 8:32 AM on July 23, 2016

If you're willing to spend some time managing them, you can get 5% interest in a few savings accounts, definitely on up to $8k. It could also be worth your time to open a couple of new checking accounts for a bonus of $100+.
posted by the agents of KAOS at 9:20 AM on July 23, 2016

Best answer: The best way I've found to save a specific amount in a specific time is an automatic transfer to a savings account at a different bank. My bank lets me do it on their web site. If I needed to save $8K in 24 months, I'd set up a transfer right after every paycheck (twice a month) for $175 to a different saving account than the one the bank gives me. Having it go off right when my paycheck comes in means I won't miss the money, since I never really had it. And keeping it in a separate account (one that I do not have checks for, or a credit/debit card for) makes it hard to spend until it's time to take the trip and I transfer it back to my main account.

As for making the most of it, you're not going to pay for the trip, or even a noticeable part of it on bank interest rates. The suggestions above on getting a credit card that will earn miles is a good one, but research the program to make sure you're earning miles that you can actually spend on the trip (ie: the airline, routes, and dates you need), and your spending to make sure you're earn enough to use. (Airlines are always finding ways to make it harder to spend miles.) But only get a card like this if you can be 100% sure you'll pay it off every month. As soon as you keep a balance, interest rates will destroy any benefits.
posted by Ookseer at 9:35 AM on July 23, 2016 [5 favorites]

Best answer: Somewhat tangential to your question, but I think if you are sharing accommodations and car rental with other adults who are also of modest means, not eating out for every meal, etc., you can certainly swing a week in Italy for 1 adult and 2 kids for less than $8,000 including airfare, especially if the rest of your family are budget-minded as well and your cousins are good at travel logistics. Like, airfare should be around $600-700 per person and so another $6,000 seems like an awful lot to budget for meals/accommodations/incidentals for one week for 1 adult and 2 kids.

As for the heart of your question, 1% or 2% interest difference between different accounts is not going to make a big difference one way or another--like maybe $100 bucks over the next two years. That may seem like something worth sweating, but its the same level of difference as saving (or failing to save) $4.00 a month over the same time period. So how much you save has a much bigger impact, really, than where you save it. I've been a single parent to two kids in grad school, so I know you already don't have a latte-a-day habit to cut back on, but that's a latte-a-month sort of difference. Put your energy into looking for those savings opportunities and the most important thing will be to make sure that when you transition to your real world job you continue to maintain your single-parent-in-grad-school frugal mentality.
posted by drlith at 12:04 PM on July 23, 2016 [3 favorites]

Totally agree with the "live like a student once you get the big job"advice! This could totally make it simple to save a lot towards your trip. I have had luck with considering ways to replace in my annual budget. I end up renting a car once a year to visit family, it was an expense I was putting $ towards monthly to help ensure I could afford it (because it was like $1000 for the 15 days).
For a few years now, I have been taking online surveys and earning points (if you try to qualify for a survey but don't due to your a/s/l, you get paid for that too). I do them when I have 15 minutes free and nothing else to do- standing in lines, on buses, etc.
I use the points to buy rental car rewards and get free or steeply discounted rentals every year now. You can also use the online survey $ to buy Starbucks cards, iTunes cards, department store gift cards, so you can replace a different recurring expense of priority to you.

(also so jelly of you going to Italy, I hope you and your kids can make it!!!)
posted by holyrood at 12:27 PM on July 23, 2016

I usually do mostly the "mattress" approach, socking away large chunks of money as I can afford it until I have enough to do the trip I want to do. Because I often travel on a tight budget and at short notice, I often do things like hold onto a paycheck for a couple of months, or put my tax refund directly into savings without touching it.

However, with close to 2 years to do this, a more incremental plan might work out best.

As a person of modest means, I find that credit card points and frequent flier miles aren't much help. If you are in the habit of charging a lot of things to an actual credit card and paying the quite large balance in full every month, I suppose this could work for you. But assuming that an additional monthly bill in the range of hundreds of dollars isn't workable for you, I wouldn't worry about it. Especially for this trip, where it sounds like you will have to travel the way the rest of your family intends to and thus may not be able to take advantage of gold status and hotel points and the like. Not to mention that these schemes aren't that useful internationally unless you mostly do resort travel or stay in American-owned huge five star hotels or the like. A pensione in a small Tuscan village isn't going to take Marriott Rewards.
posted by Sara C. at 1:10 PM on July 23, 2016

Response by poster: Thanks for the good advice. I think having a savings account in a different bank (with a direct transfer every month) is probably a good plan - that way I won't even see it.

Also - good points about the travel rewards and stuff. I do pretty much put everything on one credit card (gas, food, medical bills, etc.) that has a good airline miles program. I will start checking into what that could amount to over the next year or so.
posted by pantarei70 at 8:24 PM on July 23, 2016

Is all your income job-based or do you have any side-streams? When I was saving up for a big ($6k) purchase while I was in grad school, I had my main income from school TA stipend, but also extra cash from tutoring, pet-sitting, and random stuff. Not a lot of money, and not a lot of impact on my monthly budget, but enough that if I set it aside in a separate bank account without letting it ever become "mine" to spend, it really did accumulate.

If momentum for the family trip starts to fade out, don't stop saving! You never know with relatives whether it will spring back to life like a last-minute phoenix, and if Italy 2018 doesn't happen, something else probably will.

Good luck with the trip planning. Simply the fact that you're already working on this, plenty of time in advance, makes me feel that you'll have it well in hand. Have fun!
posted by aimedwander at 1:57 PM on July 24, 2016

Try looking into home swapping. You can get a place in Italy in the area you're visiting and while you're away, a family can stay at your home. Search for home exchange or home swap to learn more.
posted by Coffeetyme at 4:47 PM on July 24, 2016

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