Going on a vacation is thrilling, right? Now just imagine being in the middle of the vacation you have always dreamed of, then suddenly realizing you have already used up nearly all your money. Not fun at all. And that’s what brings me to budgeting.
In this guide, I am going to put you through a process of creating a budget for your vacation so that you can enjoy every part of your vacation without worry about your finances. Let’s get this started!
Background Information
Why Budget?
First of all, setting a budget is essential. Think of it as setting the boundaries of a playground. Without one, you might ramble into places you don’t want to be financially. A budget will help you avoid overspending, ensure that you get enough to do everything you want to do within your means, and put your mind at rest.
Determining Your Maximum Budget
Alright, so how do you create a budget? You take the amount you make in a month, the amount in your savings, and what you can spend without tanking your normal day-to-day existence. Let us break it down:
Sample Calculations:
- Monthly Income: $3,000
- Monthly Expenses: $2,000
- Amount Saved for Vacation: $500 per month
- Months Until You Leave: 6 months
So, if you save $500 every month, in six months you’ll have $3,000 for your trip. Simple, right?
Setting Financial Goals for Your Vacation
Setting definite and concrete financial goals for your vacation can help you stay on budget better. Maybe you decide that you will only put $1,000 into flights, $1,000 into accommodation, and $1,000 into food and activities. Breaking your budget into smaller chunks makes it far easier to manage.
Categorize Your Expenses
It’s all about breaking things down into categories so you can better understand the overview. Here are some ideas:
Transportation:
- Flights
- Trains
- Buses
- Car rentals
- Gas
Accommodation:
- Hotels
- Hostels
- Airbnb
Food:
- Eating out
- Groceries
- Snacks
- Drinks
Activities:
- Entrance fees
- Tours
- Entertainment
- Shopping
Miscellaneous:
- Souvenirs
- Tips
- Unexpected expenses
Sample Budget Breakdowns
Take a look at a few sample breakdowns to get a sense of how one might allocate a budget.
Case Study: Budget Trip to Europe
- Total Budget: $3,000
- Flights: $800
- Accommodation: $600
- Food: $400
- Activities: $800
- Miscellaneous: $400
Case Study: Luxury Trip to Hawaii
- Total Budget: $10,000
- Flights: $2,000
- Accommodation: $4,000
- Food: $1,500
- Activities: $1,500
- Miscellaneous: $1,000
Using Budgeting Tools
About Budgeting Tools and Apps
There are some awesome tools and apps available, which help track your spending. If you need them tell me and I can share a separate article for those. You can just record your spending on-the-go and you will come to know about how much more you can spend in each category.
How to Make the Most of Tools vs. Apps
It really is a breeze to use these: Just set your budget categories in the app and log every expense. For instance, if you spend $50 on dinner, you just enter that expense in your app under “Food.”
In Detail:
- Download the App: Get one that works for you
- Set Up Your Budget: Input your total budget and divide it into categories
- Input Expenses: Input each and every expense in Your Budget as it occurs.
- Keep the app open and an eye on it as things develop.
Realistic View of Real-Time Expense Tracking
Tracking your expenses in real-time will not overburden you with the problem of overspending. You will realize at the moment if you are near the spending cap for any category and make an adjustment to your expenditures.
Realize if you have spent more on dining out this month than your plan, plan to prepare a few meals to balance it out.
Plan Ahead and Research
Importance of Research
Researching your host destination is like studying for a test that you know is going to be important. You can gauge the cost of living and prevalent expenses. That will eventually take you a long way in deciding your budget.
Resources for Destination Research
Normal bloggers, travelers’ forums, guidebooks, as well as official tourism sources, are always a go-to. Blogs related to travel can help you understand the cost of meals, conveyance, and other activities.
You can follow:
- Travel Blogs: Personal experiences and guidance regarding the same.
- Forums: Community discussions on the topic and guidance.
- Guidebooks: More travel detail of destinations.
- Tourism Websites: Official travel information.
Creating Detailed Plan for Travel
Creating a detailed plan will let you know where exactly your money could be spent each day. That way, you will be able to budget your money much better without so much surprise.
An example of an itinerary:
Day 1: City Tour upon Arrival
- Expense on accommodation: $150
- Food: $50
- Activities: $30 (city tour)
Total: $230
Day 2: Enjoy the Beach
- Expense: $150 on accommodation
- Food: $50
- Activities: $20 (beach rental)
Total: $220
Book in advance to get great deals on both flights and lodging. In both cases, book as early as possible to get the best possible rates.
How to Find the Deal:
- Use Comparison Websites: Check sites like Skyscanner and Kayak.
- Set Price Alerts: Get notifications when prices drop.
- Travel Off-Season: To get discounts, travel off-season
Prioritize and Cut Costs
Determining Priorities
Decide what you care about for the trip. If getting a really fancy dinner is a big deal to you and you really want to stay at nice hotels, you can achieve those things by sacrificing all the other expenses.
Sample Priorities:
- Priority: Dining at local restaurants.
- Cut Costs: Choose budget accommodations.
- Priority: Luxury accommodation.
- Cut Costs: Cook some meals.
Sample Savings
Some of the ways you can save some money and still make the most of the experience are by booking in advance, using public transport, and looking for free or low-cost activities.
Some Practical Tips:
- Travel off-season. Prices will be cheap, and crowds will be less.
- Live in budget accommodations: hostels or Airbnb, budget hotels.
- Cook your meal. You can save money by preparing some meals yourself.
Some Practical Tips for Cutting Costs
The following are tips that will save and enable you to work within your budget:
- Use public transport; it’s cheaper compared to taxis or rental cars.
- Look for free things of doing; such attraction sites include museums, parks, or city tours; city tours will either have a minimum charge or free.
- Shop at the local markets; the food will be fresh and relatively cheap.
Tracking Your Spending
Tracking Your Expense On the Road
Monitor your spending with each expense you make during your holiday to know if you’re within your limits or not. You can update and make changes to your budget in real-time after making an expense entry.
Real-Time Budget Adjustments
Should you realize that most of the money you earlier budgeted in a particular category is being spent more than you expected, adjust your budget at this time. For example, you are overspending in activities, so eat out fewer times.
Case Study
Originally Budgeted: $500 for activities, $400 for food.
- Actual Spending: Activities $600, food $300
- Adjustment: Transfer $100 between the two categories. $100 from food to activities.
When I was during my vacation in Italy, I learned that I was spending too much on eating out. I cooked a couple of meals at home and kept my budget in track to have the rest of my holidays without any tension.
Saving and Preparing
Why Save in Advance?
By saving ahead, you avoid spending your regular earnings or from your normal savings.
Tips On How To Save Money Before Your Vacation
Limit daily expenses and look for more income sources to save for your day off. Create a special savings account and make deposits periodically.
How To Save:
- Cut Down Unnecessary Expenses: Eat out less and entertain yourself less.
- Look For Extra Income: Freelance work, part-time job, or sale of items not in use.
- Automate Savings: Have money transferred automatically to your vacation account.
Building a Financial Cushion for Emergencies
A financial cushion is there for when all else fails in addressing an associated or unexpected expense in your budget allocation.
Plan to have $200 from the total budget as a cushion for emergencies. This will be useful to finance unexpected medical, trip changes, or any other emergent expenses.
Wrapping Up
Review the main points learnt: set a budget, break down the costs, use budgeting tools, research, and plan, prioritize and cut costs, monitor spending, and save diligently.
Now, these are the only preparations needed to be done on your part, and there you are with your vacationing pleasure waiting at your doorstep. Have a safe and pleasant holiday.