How to Budget for a Vacation
After being stuck at home for way too many months of the pandemic, many of us are ready to travel again. But before you start booking flights or lodging, it’s important to figure out how your dream vacation fits into your budget. Learning how to budget for a vacation will help you be more intentional with your money, keep you from overspending (as much), and help you enjoy your vacation because you won’t be worried about money.
How to Create Your Vacation Budget
1. Examine your financial situation
The first step is to figure out how much money you currently have for a vacation. Staying within your budget can help you avoid credit card debt and allow you to enjoy your vacation without having to come home to a stack of bills you can’t pay.
Before you proceed with making plans, you need to know what you can afford and how you’ll pay for it.
(If you don’t have enough in your travel budget for the vacation you want, scroll to the end to see my advice on what to do.)
2. Explore your options
If you don’t have a specific destination in mind yet, you’ll need to research some options first. It’s possible that one of your options will be much less expensive, which could help you decide where you’ll go.
If you have a destination or activity in mind already, start exploring costs for the big ticket items, such as lodging, transportation, and major attractions. Before you book anything, you’ll want to have a general idea of how much things cost so you know if it is in your budget or not. Remember that the overall cost of your vacation will be much higher once you factor in food, activities, and other small expenses.
By the end of this step, you should have a destination/activity in mind and a general idea of how much it will cost.
Image: @jorgefdezsalas on Unsplash
3. Add in the little expenses
It can be difficult to tell how much you will actually spend each day on vacation since we all have different preferences, tastes, and budgets. One person may prefer to eat at trendy restaurants because that’s part of the appeal. Another person may enjoy grabbing food from the grocery store and having picnics. And costs will vary depending on the destination.
However, it’s a good idea to get a general idea of how much you’ll need beyond the big ticket items. Think about meals, tips, extra fees, public transportation costs, luggage fees, souvenirs, travel gear, ride sharing services, cell/internet usage, taxes, foreign transaction fees, and spontaneous activities.
Do your best to come up with a reasonable amount to include in your vacation budget. Look at how much you’ve spent in the past, see what travel experts recommend for that destination, or try out an online travel budget calculator. It’s best to overestimate what you’ll spend on a daily basis.
4. Comparison shop and book your vacation
Now that you have a general idea of how much things cost, start looking for the best prices. Check out this list of ways you can save money on travel.
Once you find the best (or at least a good) price for what you’re looking for, book all of your lodging and main transportation (flights, rental cars, ferries, trains, etc).
You’ll also want to check to see if you can save money on attractions and activities by buying in advance or by purchasing a multi-attraction pass for your destination.
5. Keep track of what you spend
You’ll need to have an idea of what you’ve been spending so you don’t accidentally go way over budget. Additionally, this information can be useful the next time you’re planning a trip.
Need a place to write down what you spent? Sign up for my email list to get a free downloadable expense tracking worksheet.
Focus on what’s really important
In order to avoid overspending and to make the most of your money, focus on what is truly important to you.
Many people believe that going on vacation means paying whatever amount for the things they want to do, see, eat, etc. It’s the ultimate splurge—isn’t that the point of a vacation?
If you have endless funds available, this is certainly an option. But spending freely can also lead to buyer’s remorse when you get home and find the bills. Additionally, overspending on your vacation means that you are unable to use your money for other things, such as saving for the future, remodeling your home, or even going on another vacation.
It’s important to find a balance between cutting costs on things that don’t matter as much and spending on what’s important. Enjoying your vacation doesn’t require that you spend freely on anything and everything. You can be responsible with your money and still have a great time.
To do this, identify what you care most about when it comes to your vacation. Maybe it’s relaxation, good food, going to a particular place, or staying in a great location. Whatever it is for you, focus on spending the bulk of your money there. Then try to cut costs on the things that don’t matter as much.
Image: @linkhoang on Unsplash
What to do if you don’t have enough money in your travel budget for your dream vacation
If you’re struggling to make ends meet, trying to pay off debt, or putting off saving for retirement, now is not the time for a $10,000 Disney vacay. But that doesn’t mean that you can’t have a vacation at all or that you can never take your dream vacation. It does mean that you need to do one (or both) of the following:
Adjust your expectations and scale back your plans for a vacation in the near or immediate future.
Create a plan to save up for your dream vacation.
Adjusting your expectations and scaling back your plans means figuring out how you can make your dream vacation less expensive or have a different type of vacation that doesn’t cost as much.
For example, if you are dreaming of a trip to Hawaii and don’t have enough in your travel budget to cover it, you have a couple of options:
See if you can find cheaper flights, accommodations, and activities in Hawaii. Check out Marcie Cheung’s list of ideas for traveling to Hawaii on a budget. (A simple Google search will generate lists of budget travel ideas for any location.)
Find a less expensive destination that will give you a similar experience. In this case, perhaps exploring the Caribbean could give you the relaxing beach experience that you’re seeking. Think about what it is about the dream vacation location that you really want and see if you can do something similar somewhere else.
Delay your trip to Hawaii and start saving in a dedicated high-yield savings account so that you can take that dream vacation in a couple of years.
Remember, a vacation does not have to be elaborate, luxurious, or expensive. Having fun does not require a lot of money. I’m confident that you can find ways to escape the 9-5 life, relax, and have fun on any budget.
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