The dreams and aspirations of the young generation are different from their parents and grandparents. While their parents and elders saved for financial goals such as buying a house or car, today’s generation is focused on saving money for experiences such as travelling and tasting different cuisines.
Millennials are bitten by the travel bug and planning for their next vacation tops their agenda. Although travelling may be all about experiences, one needs bucks to fulfil their travel goals. Travel goals vary from individual to individual from weekend gateways or foreign vacation. A vacation is meant to rejuvenate your senses and relax your mind. No matter how the short the vacation is, it is important to plan for your finances accordingly well ahead of time so that there are no last minute hassles.
One of the easiest ways to save for your travel is to have a separate savings account dedicated solely for your travel purposes. We are advocating a separate savings account so that it remains out of your sight and you are not tempted to spend from this savings account. You can set up an automatic transfer from your salary account to this savings account. Opening a savings account is easy and can be done within few clicks. There are few banks that let you open a savings bank account online instantly and give a high interest. Kotak 811 is one such savings account that you can open instantly and get a high interest rate of 6% while other banks give an interest of only 3.5% per annum. It also does not have a minimum balance requirement. It comes with a free online virtual debt card. You can also opt for physical card if you wish. While you are on vacation, you can use the saved money for your travel, shopping and eating. The remaining amount will continue to grow. Savings account gives the flexibility to withdraw your money anytime. With savings account, you can easily book flight tickets and hotels when it is available on discount. Savings account is also perfect for those sudden travel plans.
Recurring deposit is an ideal investing option that can help you to plan your travel. You can set up a recurring deposit with your bank through your bank account app. You don’t have to go to your bank for opening a recurring account. All you need to do is specify the monthly installment and tenure of the recurring account. You don’t have to look for better interest rates as the main reason of saving for travel is to gather funds and not chase returns. The interest rate matters when the money is invested for a longer term which is not the case here. When you open an RD through a bank app, the matured amount will be deposited to your bank account after maturity. You can open a recurring deposit if you have a particular time frame in mind e.g. 6 months or a year. You can set up a monthly debit amount according to the amount that would be needed for the vacation. RD calculator is a great tool that can help you to find out how much you would need to invest per month to achieve your target amount. However, you need to remember that you can’t withdraw the amount before the maturity date. Hence, it is important to keep a portion as liquid for emergency purposes.
Also, many banks provide flexible recurring deposits through which one can save varying amount each month. You can also link your goal to the recurring deposit to keep a track.
Fixed deposits can also help you to save for your travel. In case of lump sum amount, you can open an FD account through your bank app and start earning interest. Fixed deposits can have tenure from seven days to 10 years. Hence, you can also open a fixed deposit even if it is only for a few months or days. You can also open a fixed account if you had an existing recurring account that is close to maturity or has matured. You can easily calculate the maturity amount through an FD calculator.
Also, now-a-days, banks provide the facility of sweep-in where the excess funds in your savings account can be channelized to a fixed deposit thus giving you higher interest rates than savings account. You need to put a mandate and amount exceeding the mandate will be automatically saved in a fixed deposit.
While looking for saving for holidays, you don’t need to look at complicated investment options. Bank deposits can easily help you to plan for your vacations if you have a budget and follow it religiously.
Related articles:recurring account, fixed deposits, savings account
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