How to Budget for Your Next Vacation

If you’re like us, and we think you are, you’d be traveling all the time if you could. Sometimes, the toughest part about frequent travel is the financial aspect of it – travel can be costly if you aren’t careful.

The good news is, if you are careful, and you’re able to set some extra cash aside, you can find a way to make it just about anywhere with enough advance notice and planning. One of the most important elements of that plan should be your budget. Budgeting may sound daunting, but really, it will allow you to make it to the places you want to go and come back home without debt. Well worth it!

If you’re ready to take a vacation, here’s how you can set up your budget plan no matter what state your bank account is in:

Step 1: Do Your Research

Before you do anything else, do your research. Find out, for example:

  • The best times of year to travel to your destination
  • The average costs of flights to a particular destination
  • Your options for accommodations
  • Whether public transportation is safe and easy to use
  • The cost of activities you’ll want to do and sights you’ll want to see

This way, when you go to determine your budget, you’ll have a sense as to the options available to you and the price ranges for travel, accommodations, and activities while you’re there.

Step 2: Determine Your Travel Expenses

Your travel budget will vary drastically depending on your destination, who’s traveling with you, what kind of traveler you are, and more, but there are some categories that all travelers will likely cover:

  • Airfare: If you’re traveling internationally, you’ll likely have to fly to get there, and in all likelihood, this will be your biggest expense. Use this guide to finding inexpensive airfare to book your ticket and keep costs low.
  • Accommodations: Next, you need to figure out what type of accommodations you’re looking for, so you can get a sense as to how much you’ll likely spend, even if you aren’t quite ready to book. If you’re up for a hostel, for example, your budget will be lower than if you’re looking for a boutique hotel experience. You’ll know what’s generally available from your research in step one, so now you can do some additional digging to find out what the price range looks like for the type of accommodations you want specifically. This will be another large portion of your trip expenses.
  • Pro-tip: Make sure you call any hotels you’re considering to ask about special rates – you might be surprised to find more discounts available, such as those for credit card holders or those in public service.
  • Entertainment: Want to see a play or check out a museum or two while you’re traveling? Sometimes you can find packages that cover multiple sites or activities. Use your research to determine how much you should budget for entertainment. The more you can plan your entertainment ahead of time, the better –and the more you can save money!
  • Food: When it comes to dining, you can set a daily budget and then do what you can to stay within that budget each day. In our experience, you always spend more on food than you think you will. So to be safe, we recommend cushioning your food budget a little, if possible. Being hungry can really take the fun out of a day of sightseeing and day trips.
  • Transportation: When you arrive at your destination, how will you get around? By cab, by public transportation, by foot? Think this through as much as you can, and then do some research around the cost of the former two options so you can set your budget for transportation.
  • Travel insurance: As soon as you book your travel, it’s time to get travel insurance. Making sure you’re covered right away is so important. If your travel plans get knocked to the side because of something unexpected, travel insurance will be there to protect the funds you’ve invested into your trip.To get a sense of what you might pay, use our instant quote tool.
  • Souvenirs: If you’re the type of traveler who likes to purchase local goods for yourself or as presents, put it into your budget. Like with food, this is a budget that you can set based on how much extra cash you think you can spend, with a little research around the general cost of goods in that particular area. Be careful here, and determine who you’ll buy gifts for in advance and how much you can spend on each, so you don’t accidentally end up going overboard.
  • Extras: No matter where you’re headed or what type of trip you’re going on, you should definitely plan to have a little extra money on hand for emergencies or extras. This could cover anything from buying Band-Aids to buying locally-made jewelry you didn’t plan on buying, but have fallen in love with. Once you’ve covered your other categories, start to put your extra money here – most recommend putting 10-15% of your budget into this category.

Step 3: Start Saving Early

As soon as you plan your vacation, start setting money aside so you can save incrementally, rather than having to put a lot aside in the weeks leading up to the trip. All you have to do is look at your budget, and divide the total chunk you’d like to save by the number of weeks you have before you head out. Put aside as much money as you can – you can always pull it out of the budget if you don’t need all of it, but it will be difficult to make up the difference if you don’t save it originally. We recommend using a tool like mint.com to set up your budget and keep your budget on track.

Step 4: Stick to Your Budget

Budgets are great…but only if you stick to them, which can be tough when you’re traveling. If you’re worried that your budget will go out the window when you get to your destination, there are some steps you can take to make it easier on yourself:

  • If you’re using cash, put your daily budget into envelopes ahead of time. By looking at your itinerary and pulling out the money you’ve allotted for each day’s activities, you can ensure that you stay on track with your budget. Always bring a credit card, in case of emergencies, but using cash will provide a reminder that you only have a set extent of money to use each day.
  • If you’re going to use credit or debit cards, learn about rates in advance –these are often travel costs that some people forget about when planning. If you’ll incur foreign transaction fees or ATM fees, you may want to take out a good supply of cash at the beginning of your trip and budget it out. That way, you don’t have to create a budget line item just for fees – the rare occasion when they come up can come out of your Extras category.
  • If you plan on coming home with momentos, leave extra room in your suitcase on the trip to your destination. That way, you won’t have to buy an extra suitcase or pay overweight baggage fees on the return trip.
  • Make a spreadsheet with your budget in it, and make note of how much you spend each day. If you go over one day, you can determine how to adjust for the next. It happens sometimes – you just need to account for it and tweak your budget going forward (even if that means pulling from the Souvenir or Extras categories).

If you follow these steps, you should be well on your way to saving for (and taking!) the trip of a lifetime. Do you have any tips for travel budgeting? We want to spread the word about them to the Yonder community! Share with us on FacebookTwitter, or tag us on Instagram (@insureyonder). Also, if you need help deciding which travel insurance to purchase to protect the investment you’ve been saving for, our team of helpful humans are ready to assist!

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