How to Start a Travel Fund

One day a rich merchant said to his young son, “Son, I have an important question to ask you. Think carefully before you answer.”“Yes father.” replies the eager son.

“I will give you the total amount of one penny doubled each day for one month or a million dollars cash right now. Which will you choose?” the father asks with a sly grin.

The son answers without hesitation, “The million dollars of course father.”

The wise father looks at the boy and with a knowing smile takes out paper and pen. “Son,” he said quietly, “Come sit next to me and learn a lesson about wealth and patience.”

Faced with the same question, which would you choose the million dollars cash or the total amount of a single penny doubled each day for 30 days?

Let’s study the power of a penny doubled.

We’re going to take that one shinny penny and double it each day for 30 days. Believe it or not, we’ll end up with much more than a million dollars.

Day 1 – $.01
Day 2 – $.02
Day 3 – $.04
Day 4 – $.08
Day 5 – $.16
Day 6 – $.32
Day 7 – $.64
Day 8 – $1.28
Day 9 – $2.56
Day 10 – $5.12
Day 11 – $10.24
Day 12 – $20.48
Day 13 – $40.96
Day 14 – $81.92
Day 15 – $163.84
Day 16 – $327.68
Day 17 – $655.36
Day 18 – $1,310.72
Day 19 – $2,621.44
Day 20 – $5,242.88
Day 21 – $10,485.76
Day 22 – $20,971.52
Day 23 – $41, 943.04
Day 24 – $83,886.08
Day 25 – $167,772.16
Day 26 – $335,544.32
Day 27 – $671,088.64
Day 28 – $1,342,177.28
Day 29 – $2,684,354.56
Day 30 – $5,368,709.12

The moral of this story is that every little bit counts. If you can only afford to put $50 in your account every month, do it anyway. Over time, this little bit will add up to be a lot.

At the end of a year, if you save $25 a week, you’ll have enough money to travel to just about any country in the world using amazing travel websites like the Flight Deal, which publishes fares that are under $.06 a mile. Save $1.86 a day and you’ve got $500 for the year. You can also take tons of mini trips throughout the year with your travel fund money if it so suits your fancy.

A few weeks ago, there was a glitch in a not-so-well known ticket portal. Flight prices were missing fuel surcharges and tickets were being sold from Houston to Israel for $285 round trip, $130 from New York to Italy, $400 from DC to South Africa among others. There was no way I was going to miss this amazing opportunity to book a getaway.

For travel deals and general travel related expenses, I keep a dedicated travel fund (in a separate bank account that I can’t see) and deposit money into it twice a month. If I ever have to pay for a flight, I have a secret stash to pull from. I rarely pay for travel related expenses from my personal bank account. If I’m in the mood for earning double or triple miles with my Chase Sapphire or Mileage Plus Explorer cards (which is always), I’ll book with those and immediately pay it off with my travel fund.

A travel fund helps keep me in check. If I don’t have the money in my fund, I won’t book it.

Here are a few tips to begin funding your next trip:

1. Open up a dedicated savings account

I prefer to have a travel fund that’s completely separate from my checking accounts. I can’t be tempted to spend what I don’t see. Make sure you don’t face any minimum balance penalties once you start using this account and spending down the money you’ve saved. It’s also useful to have ATM and online access to this account so you can withdraw and transfer funds as it keeps you from mingling your regular accounts with your trip money.

2. Automatic Transfers

Once you have your dedicated account set up, it’s time to fill it up. Set up an automatic transfer at regular intervals (I set it for a few days after my paycheck). This is super easy to set up and adds up over time.

3. Liquidate into a travel fund

Everyone I know has had a plan to get rid of a ton of things on Craigslist or eBay. Once you set up your dedicated savings account, start emptying your closets or partner with some friends to have a seasonal sale/yard sale and split the earnings. You can deposit what you earn from your sales directly into your travel fund.

4. Clean your account every month

If you have any funds left over after paying all of your bills, living expenses & funding your savings accounts, try clearing part or all of your remaining funds and transferring them to your travel fund.

Remember that every penny counts! If you ever see penny on the ground, pick it up; it could be your next ticket to see the world!

Zim Ugochukwu

Zim Ugochukwu

Zim is an avid photographer, visual storyteller, classically trained pianist, junk foodie, vegetarian, and occasional building climber. She is the founder & CEO of Travel Noire.

10 Comments

  • Reply December 9, 2013

    Danielle

    I have a travel fund and have followed many of the tips you listed. Because of this I was able to travel to Barcelona, Italy and France (in one trip), Jamaica and the Cayman Islands (in one trip) and Puerto Rico this year. It doesn’t hurt to get a second job if you can handle it.

  • Reply December 10, 2013

    Margaret

    I don’t have a separate travel fund account. If I deposit my travel fund into my account, I’ll spend it. I’m trying to get rid of my shopping habits so I simply do not deposit my savings in my account since 98% of my shopping is done online. I travel often to NYC and was able to go to Miami this year. Next year on my list is more NYC, California and my first solo travel and international trip in a while to Italy & other parts of Southern Europe thanks to your IG post and TFG’s post about the glitch. Where are you planning to travel to next year?

  • Modupe Sonuyi
    Reply December 11, 2013

    Modupe

    Sometimes, I get anxiety when I think about travel budgets! I’m going to apply these tips immediately!

  • Reply December 17, 2013

    Jasmine

    SmartyPig is a great way to do this. It automatically schedules a transfer (once a month, weekly, etc.) after you let them know when you would like to have them money by. I have two trips that I’m saving for now and I love the site because you can send your link to family/friends and they can choose to support you if they wish.

  • […] to offer, especially if you’ve taken advice from pieces like Ballin’ on a Budget and How Start a Travel Fund to save money? There are plenty of other ways to be well connected and comfortable when traveling. […]

  • Reply April 16, 2014

    Make Time to Travel

    […] those moments of leisure. You can do this a number of ways, but a good place to begin is to start a travel fund. I also did the 52 week savings plan last year. Since I was successful last year, this year I […]

  • Reply April 17, 2014

    Dammy A

    Very helpful tips! I’m going to open a dedicated account today! Why didn’t I think of that before? 🙂

  • Reply June 16, 2014

    Xena

    I’ve used the save the dollar amount based on which week it was system in the past to get me to stop spending on frivolous things, I’ve also done the $5.00 a day savings which led to me realize just how much I spent on nonsense. Now I just put aside chunks after I’ve put aside for retirement and use that. I manage food, clothing and shelter by making them important but not so much at the forefront that they have to be the very best and latest. The same with technology. I also look for travel deals. Between the two tactics I travel when it suits me, and I go where I’m most interested in any point in time. Find what works for you.

  • Reply August 1, 2014

    Charish

    Yay! These are great tips. I already have a “goal savings” account set up and I’m going to do $7.00 a week automatic transfer. The great thing about that account is that you can’t do anything with it until you actually walk into a brick and mortar location and sign off to empty it.

    Do you have anymore articles about travel miles and credit cards? I never use credit cards because they make me nervous, but I feel like double miles might help me get abroad faster. . .

  • Reply January 31, 2015

    robynesha

    I’ve been working on my travel savings for a year or so. I’m currently saving for the 2016 Olympics in Rio de Janeiro. My savings plan involves being frugal in every aspect possible so that I can enjoy at least 1 international vacation a year. Living true to the investment motto, “Experiences, not things.”

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