Everyone plans their year around their vacation. It’s that one much anticipated time when we can lay back, enjoy the scenery, and leave all the stress of work behind. So you ask yourself, What’s it going to be this year? Are we going to the white sand beaches of Bali? Are we going to go museum hopping in Paris? Is our ski trip to Aspen long overdue?”
You could be anywhere in the planning stages of your dream trip. You could have just settled on a destination and booked your tickets and reservations. You could have just written down your list of top 10 places to go and are now saving up for when you can go.
Whatever the case may be, one thing that you’re absolutely going to need is a travel budget. Why is that you ask? Well, it’s no surprise that a vacation can do a number on your bank account.
So it’s important that you plan ahead to resist the temptation of overspending. You could go on your vacation and charge everything on your credit card and not give a second thought about it. You’ll only go back home and realize that you’ve racked up quite the credit card bill. That would be more on your plate to deal with.
Plus, you’ve been planning your whole year around this. You don’t want to bring along the anxiety of not knowing what you can and cannot spend. You have to plan your budget, so you can be free to fully enjoy your vacation.
Not having a travel budget can even make your vacation turn disastrous. No one wants their vacation to end with not just good memories, but a couple of regrets too. Everybody has experienced that one point or another and having a travel budget is one step you can take to avoid experiencing that ever again.
You want to get your money’s worth. After all, you worked so hard for it. You want to set aside some funds and know exactly where they can go towards. This will lift the stress off your vacation time. Stress is something you should leave behind, not something you should carry along with you. That just defeats the purpose of going on vacation in the first place, right?
Exactly how can a travel budget help you?
If now’s the time you’re planning the vacation, you can use your travel budget to plan it more realistically. This will limit your choice or airlines, hotels, tours, the list goes on. Don’t let the “L” word scare you off. That just means that with a travel budget, you’ll be able to do more things and visit more places.
If now’s the time you’re saving for your vacation, you can use your travel budget to set your savings goal. You’ll know what you want to do and what you have to spend on it. So that means you’ll also know how much you have to save.
If everything is packed and all your accommodations are booked, you can use your travel budget to know how much you can spend spontaneously.
Obviously, you won’t be able to plan everything ahead. The cool thing about going on vacation is that a lot of things can take you by surprise. Maybe you’ll want to try out something you just newly discovered. Maybe you want to eat a swanky local restaurant that comes highly recommended on Yelp.
Having a travel budget can help you say yes or no to these spontaneous whims and help you get the best out of your time out of town.
The best part about all this is that it’s not at all hard to do. But before we get into the details of how to create a great travel budget, it has to be clear to you that a travel budget is just a mere guide. It’s not there to be followed to a tee.
You have to create your budget with some allowances. Remember, you’re going to be dealing in estimates and you might make a mistake or two along the way.
What you’re aiming for here is flexibility, not restrictiveness. With that being said, let’s get started!
7 questions to ask yourself when creating a realistic travel budget
How are you going to get there?
Normally, one of the biggest expenses that will blow a hole in your wallet is travel fees – how you’re going to get to your destination.
Now, these could vary depending on where you’re going and where you’re coming from. You could be going there by plane, by ship, by car, etc.
You’re going to have to do your research and weigh your options. If you’re planning to travel to multiple locations, you’re going to have to research how much it’s going to cost you to go to these places as well.
Important note: Before you get anxious about this, there are a couple of fares comparing sites that you should check out. These will help you out a lot. Sites like Skyscanner, Kayak, and GoEuro will do all the work for you. You could also get good deals if you book your flights using their services.
They will list all the flight to your destination from the cheapest to the most expensive. All you’ll have to do is select the one that fits your budget the best.
Where will you be staying?
Another big expense will be your accommodations. More research has to go into this. You have to look up lodging options to decide where you’ll be staying.
Different people have different preferences. Maybe you’d like to stay at a hotel with a pool. Perhaps you’d like to stay at a hotel that’s the situation right in the thick of everything.
Maybe you’re a backpacker and you’d like to crash at a cool hostel. Do your research and find places that will fit your needs and your budget.
Important note: To get the most back out of your back, try to book a reservation at a place that offers at least one meal with your booking. Check out our Accommodations Page for the absolute best deals on hotels and hostels.
It could be a hotel that has an inclusive breakfast buffet for certain rooms or a hostel that has a kitchen that guests can use.
How are you going to be moving around?
The next thing you have to consider is what modes of transport you’re going to be using when you get to your destination.
Naturally, every location is different. If you frequent travel sites, a lot of them report that taxis in some places scam tourists who don’t know better. They ask for a lot more money if you’ve got that clueless “I’ve never been here before” look in your eye.
If you’re on a tighter budget, then perhaps the smarter way to move around is by bus or train, where the fares are always standard.
If you don’t plan to get everywhere on foot, then allotting a budget for moving around is a must.
Important note: It would be smart to search for public transport ticket options. Some cities offer a travel card that you can use on all of their public transportations. This would be way cheaper than having to pay for each individual trip.
If in your research you find out that booking taxis in advance would be cheaper than hailing them freely, then, by all means, do so.
Also, it’s important to get the locals’ perspective on how to get around. This will the lessen the chances of you being ripped off because taxis, for example, will back off if you know how much a trip to somewhere is going to cost.
What (and where) are you going to be eating?
It’s not very realistic for anyone to decide on every single place where they’re going to be eating at on their vacation. That’s just absurd.
What you aim to do here is to get a ballpark figure of how much your meals are going to cost you. Sniff around online where people give estimates to how much their meals at specific places cost.
Apps like Zomato and TripAdvisor will do that for you. People leave their reviews of the food too. Whether you’re the type who likes fine dining or hole in the wall places, these apps will come in handy.
If you’re hard-pressed for time, you can just follow this basic rule of thumb: you’ll be expected to spend 2 to 2.5 times the price of a one night’s stay at your hotel (or resort, hostel, etc.) on a day’s food expenses.
Important note: If you’re down for it, always eat at where the locals eat. These places are popular for a reason. Not only will you be getting more of a cultural experience, but you’ll also probably won’t spend as much as you would at, say, an international restaurant.
If you’re renting an Airbnb, try to cook some of your meals to save some money. This will give you the chance to check out the local markets and to save your money for fancier restaurants.
What activities will you be doing?
If you don’t have travel OCD and you don’t have to go into your vacation with a solid itinerary, that’s perfectly fine. All you need to have is a rough plan of what you’d like to do when you get there.
Let’s say your favorite band is passing by the place you’re visiting because they’re on tour and you want to go see the show, then factor in those ticket costs. Let’s say where you’re visiting offers a lot of water activities like boating and scuba diving and you want to try those out, then factor in those costs.
Just by knowing yourself and who you’ll be traveling with, you’ll have a vague idea of what you’re going to want to do. Make a list of your “must do’s” and research beforehand about how much they’re going to cost you.
Important note: Travel services offer to book major attraction tours in advance. Some of them even offer deals like special discounts and extra detours if you book earlier than when you arrive. This will help you avoid the traffic of tourists who are looking to get on these tours impulsively. Check out our recommended tour companies on our Travel Resources page for some awesome money saving deals.
Are you going to shop?
Most likely, the answer is yes. At the very least, you’ll pick up a few souvenirs to bring back home. This is something that you can’t really research, but you should set aside a budget for these costs.
Think about your shopping habits. Is this something that you really enjoy and absolutely have to do when you’re on vacation? If yes, then allow a bigger budget for it.
Important note: If you plan to bring back souvenirs for friends and family, then it would be helpful to bring a list of these people with you.
By doing this, you’ll be able to check them off and reduce the risk of overspending. Also remember that if you end up buying a lot of stuff, you’re going to have to find room for them in your luggage.
Do you have money left over for emergencies?
If not, rethink your planned expenses. You should always have money set aside if anything goes awry. It would be foolish to just assume that everything is going to go smoothly.
In case something like a medical emergency arises or even stumbling upon a cool shop or restaurant, it would be smart to be prepared for it.
Important note: If you don’t have a clue about how much we’re talking here, a general rule is to set aside 2 to 3 days’ worth of daily expenses as an emergency budget per person.
For those who are looking to make a simple budget, how do you get started?
People who travel a lot have a sense of where they’re going to spend their money on and don’t even need to write all these down as for reference.
They usually have a ballpark number of how much they can spend in a day or even a week without going over their budget.
If you’re new to this, then all this planning can be a bit overwhelming. So how do you get started?
First, you’ll have to do research about the location you’re traveling to. You have to know what the approximate cost of living is going to be.
Personally, in order to do this, I check how much a night’s stay is at the average hostel. I do this even if I don’t plan on staying at a hostel for a number of reasons.
- There is always going to be a hostel anywhere in the world.
- Researching these hostels isn’t difficult at all. One site will list all the hostels in an area for you.
- They always update their pricing.
- You can get a ballpark idea of how much lodging is going to cost for the traveler on a budget because they base their pricing on this.
- The cost per stay at a hostel reflects its quality. You can then compare other accommodations to this level of pricing and quality.
Knowing the cost of living index would come in handy if you play to stay and live like a local for a while. So if you plan to stay somewhere for a relatively long time, then it would be smart for you to do this.
After you figure out how much the average hostel costs per night, multiply that by 3. That’s going to be your budget for one day.
To illustrate, let’s say the average hostel costs $25 a night. That would give me $75 as my daily budget. To break that down, I’d have:
- $25 for my accommodations
- $25 for my food
- $25 for everything else
So if you plan to rent an apartment for a whole month, then you need to find one that would cost less than $25 to rent per night – less than (25×30) $750 per month. If you go over your food budget, then cut costs on your “everything else” budget to compensate.
Will this really work?
This is how I do my own budgeting and of course, I have my own level of comfort that I have to meet. But it may be different for you. You may be able to multiply the average hostel cost by 2 if you can get by on that.
Maybe your standard of living is higher than mine and you need to multiply it by 4. The trick here is to practice. Test out your “factor” by making a detailed budget of one vacation and compare it to the next. You could even do this by benchmarking values in your own area.
If you get good at this, you’ll be able to have an idea of what a good budget would look like for your next trip. This would be an advantage when your plans aren’t really solid and are likely to change on the fly.
Okay, so how do I put this in use?
Let’s stick to our hypothetical budget of $75 per day. What I do is I would take out a week’s worth of my budget at a time so I don’t incur a lot of ATM fees (I’ve learned my lesson).
So I would have $525, but I would only carry $75 with me on a daily basis. This helps me plan ahead. Let’s say I’m going out for drinks with some friends for the night, then I would cut back on food costs during the day.
If I reach the end of the week without even spending my entire budget, that would give me the chance to splurge on some treats.
What should have their own sections in my budget?
You can manage by allotting your food and “everything else” budget for little trinkets, cheap tickets, and snacks. However, if in the middle of the trip, you plan to take an expensive sailing trip, a class or go to a concert, then those shouldn’t be included in your daily budget.
Treat them as separate expenses, so you don’t have to scrimp on food and other essentials.
Traveling for longer periods
After you’ve figured out how much going to a specific location will cost you, check your overall costs and compute the average cost per day.
How can you tell if you’re budgeting like a champ or spending way too much? One way to do this is by comparing the time you can live on that budget in a high-cost destination versus a low-cost destination.
To give you an example, the same budget that you could manage on for 3 months in Europe could last you 6 months in Southeast Asia.
If you plan to travel the globe, plan your budget accordingly. That means you’ll be able to stay longer in low-cost destinations if that’s what you want.
Testing it out
Figure out your factor
You can test your theory by creating a detailed budget for a specific destination. Once you have this, you can then divide the daily cost by the average hostel cost. Round it up it down to the nearest whole number and this is going to be your factor.
Separate bigger items in your budget
Remember, do not include more expensive items in your daily budget. So, in theory, it could look something like this:
- Location A, 7 days: $75 per day = $525
- Location B, 14 days: $60 per day = $840
- Location C, 21 days: $40 per day = $840
- Airfare from home to A: $600
- Cruise from A to B: $250
- Concert ticket: $175
TOTAL OF: $3,230 for 42 days (6 weeks)
Allow for some flexibility
You might find that you’d want to change things up a bit because you’re liking a place a lot more than you expected. For example, this is what your new schedule could look like:
- Location A, 7 days: $75 per day = $525
- Location B, 21 days: $60 per day = $1,260
- Location C, 14days: $40 per day = $560
The average cost per day will make it out to $56 from your original plan of $53. That’s not much of a difference, but you will have to consider this if you’re on a tight budget. So there you go, you’re now armed with the right knowledge to plan your travel budget.
Here’s a very handy MS Office Template to Budget for Travel
DO YOU BUDGET FOR TRAVEL?