Wondering how much money you need for your next trip and how to save for it? These tips will make budgeting for vacation part of your daily life.
Going on vacation is extremely exciting, and if you’re anything like me, you want to have the expense details clearly budgeted. As a planner myself, I am giving you my top tips for budgeting for vacation that will have you as prepared as possible.
You will learn how to budget for all of the details of your vacation, see where you can “find” money in your monthly expenses and know how to use money saving travel hacks to your advantage.
After learning about all of these budgeting for vacation tips, you are going to feel like a pro when it comes to saving for your next adventure.
This post is all about budgeting for your vacation.
Budgeting For Vacation
Step 1: Know Your Max Budget For Vacation
Before you can begin budgeting for your vacation, you need to establish a maximum budget for your trip. This amount should be what you can pay prior to your vacation starting. You’ll want to consider if this is a once in a lifetime adventure, a special occasion, an annual event, etc. What is the number that is too much? What are you not willing to pay for the experience? Find this number and stick to it.
Having a max budget also lets you know if certain expenses on your vacation are really worth it or not. You’ll want to prioritize what is non-negotiable and what it is that you’re willing to change or let go of all together. If your vacation is too expensive, it may be worth staying somewhere cheaper, going for less time or traveling in the off season for your destination. Whatever you decide, don’t go over your maximum budget.
One more thing to consider is what your vacation time with your employer looks like, or what your opportunity cost (potential lost profit for missed work) is for time off if you are self-employed. We are self-employed, so what time of year we travel verses our business’s busy season makes a big difference in our overall maximum budget.
Step 2: Add Up All of The Real Costs of Your Vacation
The biggest part of budgeting is knowing your costs. For vacation, you will need to know all of the actual costs associated with your trip. This is where you want to list every detail, as well as anticipated or known expenses for each one.
If you’re just beginning to plan your vacation, do your research and find different price points, plus the pros and cons for where you’re wanting to stay, what you’re wanting to do, what you’re hoping to buy, etc. Do this for each of the categories listed below. Don’t forget to include travel days in your budgeting for vacation, not just destination days.
After making this list, you can go back over it and see where you can save money. Maybe a cheaper hotel? Fly on a red eye? It is extremely important to list each expense realistically. Consider the following:
- travel – gas, airfare, rental car, taxi rides, bus tickets, etc.
- hotel or lodging – include parking and resort fees
- food and drink – don’t forget to include grocery stores, not just eating out
- excursions or side trips
- tickets – shows, tours, museums, theme parks, canal tours, hop on/hop off bus tours
- tips – everyone from your taxi driver to your tour guide according to local culture
Step 3: Look At Your Monthly Expenses To Better Budget For Vacation
Hopefully, you already have a monthly budget written out. But even if you don’t, you can still look at what you spend each month by studying your bank statements and habits. We all have areas we can cut back on, whether it’s buying store brand when grocery shopping or committing to only 1 streaming service a month. A lot of what you spend in a month is a variable expense, as in something that is not necessary to your survival. Or the amount of money you dedicate to it can be adjusted.
Analyze how you spend your money and find a few places you are willing to sacrifice or cut back on so you can save for vacation instead. Skipping an extra cocktail, carpooling with a co-worker or another parent to practices or trying a spending freeze for a month where you don’t buy anything can save you a lot of money that you already have.
Now you can put that money toward budgeting for vacation. Reconsider if you really want a Starbucks while running errands. Or would you rather enjoy that latte in an authentic cafe somewhere?
Step 4: Save Any Extra Money You Come Across For Vacation
One of the easiest and most pain-free ways to budget for vacation costs is to save any extra money you come across. You may be thinking “what extra money?”, but you’d be surprised how quickly money you don’t count on adds up. It could be money you receive for a birthday or for Christmas. Put the change from your pocket or purse into a jar every night and don’t touch it until a week before your trip. I sometimes put aside some of the cash in my wallet and pretend it doesn’t exist.
Extra money can also be in the form of a bonus from work, tips received, selling things around your house you no longer want or need. It can also be as simple as setting aside a percentage of your savings each month for travel. Even better, open a separate savings account just for vacation funds.
Step 5: Use Your Credit Card To Your Advantage
First off, I want to say that if you are not good at paying off your credit card monthly, then this isn’t a budgeting for vacation step you should use.
With that said, know the perks of your credit card. If you receive cash back, use that toward your vacation fund. If it’s airline miles, then use your credit card for monthly expenses and let those miles build up! There are many credit card travel hacks to be found with a quick search on the internet. If your credit card does not offer any benefits you can use for traveling, consider switching cards to one that does.
Also worth noting here, many credit cards offer travel insurance, lost luggage reimbursements, discounts on car rentals, airline lounge access (hello, free food and drinks!) and much more. Check your credit card’s fine print and know what expenses you already have covered just by using your credit card to pay for your vacation.
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