Travel may or may not return to normal soon, but saving money in a travel fund now could lead to premium travel experiences down the road.
The coronavirus crisis has affected everyone to some extent, whether it is their health, their wallet or their vacation. This year our family of six had two major trips canceled and another trip was postponed twice. While many popular travel destinations have reopened recently, we are hesitant to venture out. Several family members have underlying health conditions that put them at increased risk for serious illness from COVID-19.
However, we don’t give up hope to explore the world. We traded our beach vacation for social distancing day trips and regional weekend trips.
We have also decided to double our travel budget in the future.
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Why Budget More Money for Travel During a Pandemic?
My wife and I consider ourselves very lucky that, so far, the coronavirus pandemic has not had a substantial economic impact on our family. We know that is not the case for hundreds of thousands of people.
If this year has taught us anything, it’s to prioritize the things you value. For us, it’s traveling. We’ve done our fair share of traveling over the years, but now we make travel one of our family’s core values.
To think about it, we’ve reworked our budget to save twice as much money in our travel fund as in the past.
How we build our travel fund
We do some of our banking locally, but we have taken steps to set up several sinking funds online through Capital One. A sinking fund is money that you set aside each month for a planned expense. Some of our sinking funds include:
- To travel
- School and extracurricular activities
- Car repairs
We use Capital One 360 performance savings accounts for all of our sinking funds. There are no monthly fees and they also earn interest. We can track our travel fund and other savings goals online and through the mobile app, no matter where we travel.
One of the lesser-known advantages of Capital One Performance Savings is that you can open up to 25 accounts. If you are familiar with the cash envelope budgeting method, it is basically the same concept but in digital form.
We could earn more interest if we kept all of our savings in one account, but that’s not the idea with these funds. We motivate ourselves by tracking the progress of each goal.
We are currently budgeting a month in advance, so on the first of the month a predetermined amount of money is automatically transferred to each account from our main checking account. Setting up automatic transfers makes it easier to save than if we were to do it manually. There is no doubt or expense for another expense.
Store travel rewards for future trips
Doubling our travel budget will give our families the means to travel more. We also take advantage of travel credit cards to earn rewards. Over the past few years, we’ve used points and miles to fund several family vacations.
With a family of six, it’s not easy to earn enough rewards to pay for all of us, so our focus is on points for accommodation first and then on air travel. We use our travel fund for our other expenses.
Versatile travel rewards are huge for us, especially now when we aren’t planning a specific trip. My wife and I both have the Chase Sapphire Preferred® card and I also have the Chase Ink Business Preferred℠ credit card which I use for all of my business expenses. Both cards earn Chase Ultimate Rewards points, one of the most popular and versatile travel rewards.
Not only do these two cards come with a huge sign-up bonus, but Chase Ultimate Rewards allows you to book travel directly through its hub (often at a discounted rate) or by transferring points to one of its partner programs. . Partner programs include national and international airlines as well as major hotel chains.
Fans of travel rewards often look at trade-in values, which is a great strategy. However, as we travel primarily as a family, we value other criteria, such as accommodation that can comfortably accommodate six people and family-friendly transfer partners.
Our travel rewards aren’t limited to cards that earn Chase Ultimate rewards. We have accumulated a considerable amount of points thanks to other travel cards in the last year:
My wife and I each have credit cards that we use for our daily expenses, as well as a handful of other reward credit cards that we use as needed. We’re both currently under the Chase 5/24 rule, so we’ll probably be adding a few Southwest Airlines cards to the mix to try and earn a companion pass. We have enjoyed this benefit in the past, although it is not always easy to achieve. We may also add a premium credit card with airport lounge access as we get closer to travel again.
There is nothing wrong with having multiple credit cards as long as you manage them properly. The last thing you want to do is earn rewards and cancel them with interest charges. Whenever we use credit cards, we strive to pay them off in full and never carry a balance. We earn all of our travel rewards through daily expenses that are already within our budget. A simple spreadsheet helps us manage all of our credit cards.
Our future travel plans
Our travel plans generally do not include stays in luxury accommodation or first class flights. The number of points and miles needed for a large family to fund a week-long trip with rewards alone is usually not achievable. Now that we’ve doubled our travel budget, we’re likely going to splurge on an epic family vacation full of enhanced travel perks.
We have traveled a lot, but nowhere would you consider exotic. With security restrictions and family health concerns, our trips will end up staying national for now. We are considering an extended family trip to Hawaii, a road trip along the California coast and other places in the west. We are soon in desperate need of a beach so that we can descend to Destin, Florida, or Gulf Shores, Alabama.
We usually build our travel fund and earn rewards by thinking about a specific trip, but we’re only building inventory for now. We hope the current situation improves enough that we feel safe to travel again soon. And when it does, we’ll be ready.