4 Steps to Save Money for Travel in Your 20s

First, decide your destination, and then list all the expenses that you anticipate, such as travel, accommodation, sightseeing, activities, food and shopping. This will dictate your travel budget, and ultimately, the investment planning and decisions required to achieve it within the time available.

Select the month or year in which you want to travel, to determine your investment tenure. This will depend on your budget and your current income status. As you might just be starting your career in your 20s, you need to be mindful of your income and outflows, and plan prudently.

Manage daily expenses carefully and allocate maximum possible income to investments. Your investment strategy will depend on your tenure and risk appetite, so here are the options available to you:

• Short timeframe: If you are looking to travel in the next 6-8 months, you should consider less risky instruments like debt funds or ultra-short-term funds. This will ensure steady growth as well as the stability of your investments. Even liquid funds can be considered for short timeframes.
• Medium timeframe: If you have scheduled your travel after 1.5-2 years, then you can consider debt funds. Hybrid funds are also good investment options.
• Long timeframe: If you are planning a trip after 3-4 years, then you could consider equity shares or equity mutual funds as they have the potential to rapidly grow your investments and help achieve your goal. However, they come with a certain level of risk. Equity Index funds are another alternative. Overall equity mutual funds through the SIP route provide a disciplined approach to invest and achieve your goals over a long timeframe.

Track your portfolio and make financial decisions accordingly. If you feel that more investments are required to meet your budgetary goal, try to include more growth-oriented investments and manage expenses to ensure faster growth.