Building A Travel Fund: How To Save Rs 4 Lakh For Your Dream International Trip
Saving money for travel needs steady investment and a financial plan as per your estimated budget.
A foreign trip is a dream for many people. However, the travel expenses often become an obstacle. It’s usually not the destination that delays your plans—it’s the budget.
If you're earning a modest salary and juggling rising expenses, saving for an international trip might feel out of reach. However, with disciplined planning and smart saving strategies, setting aside Rs 4 lakh for your dream trip is entirely possible—no matter where you want to go.
For this, the first thing you need to do is to prepare an estimated budget as per your itinerary. Based on your estimate, you can plan your investments to build a travel fund over a certain period.
You can choose mutual fund SIPs and other investment instruments to fund your dream foreign trip. SIPs allow you to invest a fixed amount at periodic intervals, such as monthly or quarterly.
Let’s see how you can build Rs 4 lakh via SIP for your travel needs:
Tenure: 3 years
Interest Rate: 12%
Total Returns: Rs 71,000
Total Investment: Rs 3.42 lakh
Total Corpus: Rs 4.1 lakh
If you want to save Rs 4 lakh in three years, a monthly SIP of Rs 9,500 will be required to achieve your target at an estimated return of 12% per annum.
This could be a suitable choice, as equity mutual funds often offer higher returns over a longer tenure compared to fixed deposits or savings accounts.
If your trip is scheduled within the next 1-2 years, then you may prefer Fixed Deposits (FDs). Even though the return rate is lower in FD (usually around 6 to 7%), they offer guaranteed returns.
How To Save For Your Dream Foreign Trip
The first step is to create a dedicated travel fund. It should be a separate account and must only include travel expenses.
After deciding when you want to travel, begin planning your savings and investments accordingly. Diversify your investment instruments to achieve the Rs 4-lakh target. An online SIP calculator will give you a fair idea about estimated returns and the monthly investment amount.
Another option is a Recurring Deposit, which is generally considered safer than SIPs. You invest a fixed amount every month at an annual interest rate typically ranging between 7% and 8%.
Try to avoid non-essential spending, such as ordering food often or making impulse purchases online. You could also consider cancelling a few OTT subscriptions. The money saved can go into your savings, helping you build a travel fund in a shorter duration. You can also keep a track of travel deals to stay updated on flight offers, off-season travel deals and discounts on packages.
