How to budget for a vacation in 5 easy steps
Vacation costs can easily spiral out of control if you’re not disciplined, so don’t let a well-deserved “inexpensive” getaway turn into a fiasco you’ll pay back for years to come!
Whether traveling with family, friends or going solo, there are a few ways to help minimize your expenses by using a little forethought. This can free up budget to spend on unique and unforeseen opportunities (paragliding at the beach anyone?).
Here are five steps to help budget for a vacation:
1. Map out your costs
Start either with a fixed budget or by calculating the “big number” on the trip and work backward. You can prioritize the most important elements (hiring a top guide for an outdoor adventure trip) and cut costs on the non-essentials (try a hostel or Airbnb, skip the pricey hotel). Or maybe what you’re looking for is luxury accommodation so you can lounge around a pool with umbrella drinks, that’s fine too — the point is to decide what expenses are important to your vacation and cut costs on the nonessentials.
2. Research your destination
To get a realistic budget based on your destination and activities, do some advance research on airfares, food and lodging costs and likely transportation expenses. Once you know what the bottom line is, start finding ways to reduce your expenses. You can experiment with off-peak travel dates. Discount sites are another way to find deals on affordable meals and activities, so disregard them at your own risk. It might even be possible to catch a break on accommodations. Once you start deal-hunting you’d be surprised at how quickly you can lower your costs.
3. Save in advance
Plan ahead and save up over time. If you’ve determined your budget and expenses, settle on an amount you can manageably set aside each pay check to have savings on hand. For example, if your vacation will cost $2,000, start planning 10 months ahead of time. Set aside $200 a month (or $50 a week) for your vacation. This requires preparation well in advance, but being able to pay for your vacation directly can help avoid debt and make your vacation that much sweeter.
4. Be prepared
If travel and exploration are your passion — or you just feel strongly about not leaving unused vacation time — you can take the next step: create a savings fund that’s earmarked for trips and travel. If you contribute a little bit every month, you’ll be building the means for a future destination vacation, and you’ll be more likely to have cash on hand for last-minute getaways and surprise travel deals.
5. Be a disciplined traveler
Be careful of impulse buys, and if you think something is a “must-have” keep the price within your budget. There are nearly limitless opportunities for frivolous spending while traveling: gift shops, side jaunts, expensive restaurants. Set a daily spending limit and stick to it. It can also help to build a little slack into your budget for spontaneous spending. For example, if your estimated spending budget for a short getaway is $500, rather than telling yourself you’ll avoid any extra purchases, set it at $750 and leave yourself options.
With your budget in hand, you may have some additional unanswered questions about managing your travel costs. Here are some other topics of interest to thrifty travelers:
Are there hidden fees with travel websites?
A question a lot of novice travelers ask is “Are there hidden fees with travel websites?” The short answer is “yes, sometimes”, but a more thoughtful response is “they actually aren’t that well-hidden.” In other words, to make the most of discount sites, be sure to pay close attention to the fine print details, service fees, taxes, etc. and look before you click.
Family travel on a budget
Bringing along the entire family represents another set of challenges — in part because you’ll be budgeting for a whole group. Advance planning and deal hunting are particularly key for family travel, so take all of the other advice here to heart. Some additional helpful advice is to economize wherever you can: avoid paying top dollar for meals or transportation whenever possible, skip upgrades (unless they’re free!), use local transportation instead of luxury or tourist options, investigate “off-season” destinations when they’re offering discounts and, in general, make sure to do your research.
Loyalty programs and credit card rewards
These can also be key tools for economizing or saving for a family vacation. As long as you keep within the boundaries of your normal spending, swiping rewards cards for day-to-day expenses may provide points that can be applied to lower your vacation costs. Similarly, using loyalty programs for hospitality or airfare could not only help drop the cost of the room or the flight, but provide additional related discounts — airline loyalty might offer discounts on rooms, hotel loyalty could offer discounted car rentals, etc.
In case you go over budget
Virtually everyone can relate to an unplanned overspending scenario. Maybe there was an emergency. Maybe someone just had a moment of weakness in the Duty-Free. Now the important thing is to get the bill under control.
Make sure to pay any vacation-related expenses on time, especially credit card bills to avoid adding on late fees. Pay more than the minimum on credit cards whenever possible. Even an extra $10-$20 beyond minimum payment will give you a leg up on controlling extra interest accruing on your purchases. Paying twice the minimum would be even better, or up to as much as you can comfortably afford. Don’t let the balances sit! Finally, if you overspend on a credit card, retire the card until the balance is gone — keep it for emergencies, but take it out of everyday use until you tame the bill.
A financial professional can help
If travel and vacations are a big part of what makes your life worth living, working with a financial professional can help you integrate your travel goals with any other emerging priorities, from going back to school, to buying a home, to planning for retirement. Remember, the key to a rich life is being able to balance your financial priorities. With hard work and a long-term financial strategy, you may find that you can truly have — and afford — it all.
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2022-146948 Exp. 11/2024 *pre-approved content