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Here are some ways Canadians can save money on travel for holiday vacations and beyond—including flight hacks, thrifty destinations and more.
Despite high interest rates and inflation, statistics show that many Canadians are still making travel a priority. In August 2023, Canadians took 924,900 return trips overseas, up 22.9% year-over-year and just 17.4% shy of pre-pandemic levels, reports Statistics Canada. Bookings by Canadians going overseas have grown year-over-year for each month in 2023 so far. Talk about escaping reality.
Many of us are also making sacrifices to afford our vacation plans. Forty one per cent of Canadians cut back on their grocery spending to afford travel, according to a survey by FlightHub Group. Plus, over one in four (28%) Canadians who can’t afford travel have taken on credit card debt to finance their trips, the survey found.
Nobody wants to come home from a relaxing holiday only to face a sizable credit card bill. (Yup, I’ve been there myself, and while I’m not proud, I’m not afraid to admit it.) Instead of taking on debt to pay for travel, try a combination of money-saving strategies and clever travel hacks from the experts. Here’s how to get started.
Where you go can make a big difference in cost. Danica Nelson is a personal finance influencer and avid traveller who’s visited 25 countries. When she’s not border-hopping, she maintains a home base in Toronto. Nelson says that choosing affordable destinations where she can stretch her Canadian dollar further—like Indonesia, Thailand and Vietnam, to name a few—has been key.
“In Vietnam, I could stay in a five-star hotel for as low as $55 Canadian per night. In Da Nang, you could get the freshest seafood available and a beer for $5 Canadian, or a banh mi sandwich for about $1 Canadian,” Nelson says. She’s even gotten a flower bath and one-hour massage for $60 Canadian in Bali. (FOMO-inducing, I know.) For more inspiration, check out four Canadian digital nomads who travel to, or live year-round in, affordable destinations like Panama, Costa Rica, Greece and more.
What’s your strategy for saving on your next trip? ✈️
— MoneySense (@MoneySense) November 2, 2023
Booking with a travel credit card can be a cheaper way to travel, since you may be able to get cheaper pricing on flights, hotels and rental cars through your credit card’s rewards program. With my co-branded CIBC Aeroplan Visa card, for example, I earn Aeroplan points on my purchases, and I can get preferred pricing on Air Canada flights. This means I can use fewer Aeroplan rewards points than the amount typically required to book flights.
Nelson adds that using a travel card can also help you avoid foreign transaction fees (typically around 2% to 3%) while you’re abroad, and earn more points to redeem towards hotels or flights for future trips.
Switching out your suitcase for a carry-on bag can help you save money and time at the airport. “Travelling with only a carry-on- has been a way that people have learned to save a lot of money by not having to pay for checked baggage fees,” Nelson says. She recommends investing in a small suitcase that fits the airline carry-on baggage size requirements and one personal item like a backpack, purse or tote bag. Check ahead of time whether your flight carrier charges for checked baggage, as in some cases, you could get a stowed suitcase for free with your ticket.
Personally, I’ve changed over to a small carry-on suitcase, and it’s saved me the hassle and cost of checked baggage. Some other hacks I use to save money on travel: I buy groceries for lunches and breakfasts. I also budget for dinners out ahead of time, and any other costs like coffees or treats here and there.
Nelson uses travel deal sites like Next Departure (which also has an app) and Flytrippers, and flight search tools like Google Flights to get notified when airlines have flash sales.
“Google Flights will give you a calendar that shows when would be the cheapest return and departure days for you to travel on after you input the length of your trip,” Nelson says.
Another easy thing to do is sign up for airline newsletters or follow airlines on social media. Air Canada, WestJet and other airlines often have deals for flights to certain destinations or incentives for booking all-inclusive trip packages (hello, holiday vacation). So if you’re looking for discounts, turn those email notifications on.
It’s easier to get cheaper flights if you can be flexible with your dates, Nelson notes. She also recommends avoiding peak travel dates like long weekends, holidays and mid-summer. Flight prices tend to be more expensive on weekends in general, so if you can, try to fly on a weekday, too.
If you can’t be flexible with your dates and you prefer to iron out your plans ahead of time, don’t fret—Nelson says she sometimes sees deals that are posted a few months in advance. Again, it’s a good idea to sign up for airline mailing lists and follow airlines on social media.
You can choose from a wide range of credit card rewards programs to fit your spending habits and preferences. If you want to make travel a priority, consider using a travel credit card that allows you to earn points you can redeem on flights and hotels. Travel cards often come with insurance—which can cover trip cancellations, flight delays and emergency medical expenses—and rental car insurance. That may save money on something you weren’t expecting to happen, from lost baggage and a canceled flight to a hospital stay. Look into what your card’s insurance policy includes—if the coverage is good enough, you might not have to tack on any extra coverage when booking your vacay.
Nelson says she saves a lot of money on flights and accommodations by redeeming credit card reward points. She uses the Scotiabank Passport Visa Infinite, which earns Scene+ points, because she prefers the flexibility of being able to redeem her points on her credit card statements to cover travel bookings for everything from flights to Airbnbs and hotels. She isn’t loyal to specific airlines, so Scene+ works better for her than programs that require booking flights through a travel portal. Nelson says that American Express travel credit cards offer similar flexibility and high earn rates, as you can transfer your points to other airline programs for “the ultimate flexibility.” She does say that travel rewards points systems aren’t always easy to navigate, and that you should do the math to see if it would be cheaper for you to redeem your hard-earned points or pay out of pocket.
“If you are someone who tends to travel in North America, for example, or you have a more consistent or predictable way to travel, then airline-specific travel points programs [like Aeroplan] might actually be the best for you,” Nelson says. “You can apply the points towards your favourite airline and maybe get upgraded to business class.”
Create a budget for your vacation to estimate your total travel expenses and determine how much you need to save for your big trip.
A sinking fund is a great way to separate your “fun money” (a.k.a. travel money) from your “bills and necessities” account. Nelson recommends that you stash your sinking fund savings in a high-interest savings account (HISA). She suggests looking for accounts with generous interest rate offers and welcome bonuses. She uses EQ’s Personal Account and the Wealthsimple Cash Account. That way, you can be rewarded for your savings and grow your balance—that means more money for dinners out and souvenirs on your getaway.
I use a HISA myself to save for trips, starting several months in advance. The high promotional rates applied to my deposits help my savings grow steadily.
Joseph Curry, Certified Financial Planner at Matthews + Associates in Peterborough, Ontario and Founder of RetirementPlanningSimplified.ca, applies the personal finance mantra “pay yourself first” for discretionary savings like travel. He says your “hub account” is where your income should go, using this model. Payments like your rent/mortgage, retirement savings and utility bills should be automatically drawn out of the hub account, Curry says. Then you have your discretionary spending account, which you can use for expenses like groceries. (Yes—groceries are discretionary, even though they are a necessity, because you can go “all out” and buy fancy foods or stick to the essentials, depending on your values, Curry says.)
“The problem for people who want to travel is that if you just put all that excess discretionary money down into one account, it usually just gets spent right away because you know you don’t need the money for travel or other big ticket items right away,” Curry says. “Then when the trip comes up, you might have to end up putting your trip expenses on your credit card, because you didn’t save any of your discretionary money specifically for travelling.”
Relying on your credit card for travel expenses can be dangerous, Curry says, because your balance might grow beyond what you can pay off when you return—especially if you rack up interest charges, too. “It’s kind of a snowball effect that will just make it more and more difficult to travel in the future, because now instead of starting to save for the next trip you are stuck paying down the previous trip.”
This is why he suggests opening a separate high-interest savings account for your travel funds. Set up an automatic transfer or manually move some money from your discretionary account (what’s left after paying your bills) to your travel fund after each paycheque. But make sure you know how much discretionary money you need to set aside for groceries and things you may not want to part with—like a gym membership or your cellphone plan.
Be conscious about where you want your discretionary money to go. Get clear on your priorities, too—if you value shopping and dinners out more than you value travel, then you don’t have to say yes to every trip you’re invited to (like your cousin’s destination wedding or a lavish bachelorette party abroad). But if travel is a priority for you and you have a few vacations planned for the year, get started on your sinking fund.
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