Christmas is over, and the new year is coming up. Resolutions will be made shortly, then ignored shortly after that. Assuming that if you read this blog, you’ll have some sort of travel more / work less resolution for 2012, Lisa and I created a series of posts this week to help you save money in 2012 and make your travel dreams a reality. But you’ve got to commit. If you want to take a year off, you’ve got to make it a priority.
Phase one, laying the foundation, has two steps:
Step One: Get The Right Bank Accounts
You need two accounts. If you disagree, leave a comment!
Open an online savings account with a “high” interest rate
You’ve got to open a savings account and separate your savings from your checking account. If your money is accessible, you will access it. You need it to be a bit of a hassle to access your trip fund. If you’re hoping to travel to Europe or South America, you can’t dip into the fund for a fun staycation some weekend you’re feeling spendy. Keep the money separate.
And when it’s separate, you can watch it grow, and watching it grow is tremendous motivation. It’s great to have a thousand dollars in the travel fund. It feels wonderful. Two thousand feels even better. You’ll see. It’s addictive.
Discover is currently offering the best savings rate (1.0%), but HSBC, Ally, and Capital One are other good options. None of these accounts ding you with fees and all have rates competitive with the Discover option. Note that most of these rates are better than national bank CD rates, which is why I’m not a big fan of CD accounts.
Switch to a no-fee / free checking account
With interest rates so low, fees can kill your savings faster than you can build them. Even $5 a month is $60 a year, which is more than enough to cover the baggage charges on your flight to Paris. You can’t afford to pay any fees, so open a bank account that doesn’t charge any. The same cast of characters leads here too (Ally, Capital One). Check out Google to help compare your checking options.
And while you’re at it, consider getting one of the best checking accounts for travelers, one that reimburses ATM fees and maybe doesn’t charge foreign transaction fees. The big national banks don’t offer either of these features, as far as I know.
Step Two: Monitor Your Money
Start using Mint.com to monitor your various accounts. Mint helps you see what you’re spending money on, and it reminds you to pay your bills on time. It takes a bit of time to set up, but it’s worth it — it’s the best window into your finances anybody offers and it’s free. Yep, free.
That’s it for phase one. Next up: ways to save so you can start piling money into your travel fund even faster.