How to Determine Your Vacation Budget
Travelers often get a little bit starry-eyed when it comes to planning their dream vacations. So starry-eyed, in fact, that they forget to consider how much their trip will cost. If you start planning your get-away without a budget in mind, you may end up with a much bigger bill than you can handle. Even if you think you’re going to be frugal, a tiny upgrade here and a little extra expense there can rapidly get out of control.
That’s why it’s important to figure out what you can afford before you begin making reservations or booking flights. Creating a budget will help you build realistic expectations, and make sure you’re not stressed about money while you’re away.
Start saving
The first step towards determining your vacation budget is figuring out what you can save between now and your next trip. Look at your expenses and try to determine how much you can put towards travel each month. You may already have a little bit of wiggle room to take advantage of: If not, honestly evaluate your spending and see if there’s anything you can skip. Whether it’s packing lunch more often or getting plain coffee instead of a latte, there are probably ways you can cut your monthly costs.
When you’ve figured out what you can put away, you can determine your budget. You can do this one of two ways: If you have a specific date in mind for your next vacation, count back from that date to see how much you’ll have saved. If you’d rather wait to take a vacation until you’ve saved a certain amount, you can base your trip date on how long it will take you to reach your goal. Either way, you’ll end up with a date, a budget total and a savings goal with which to move forward.
Building your budget
Figuring out your total allowance is just one small step in the wider vacation-budget process. Once you know how much you can spend overall, you need to figure out how that money will be distributed over the course of your trip. Generally, transportation and lodging will be the highest-ticket items on your budget. These are the things you’ll need to purchase first, and will determine how much you can put towards other parts of your trip.
When you’re filling out the details of your budget, be sure to take any foreign exchange rates into account. People are used to dealing with the money they use every day, which means it might be hard for you to appreciate the different value of another country’s currency. This particularly plagues travelers who are going from a country like the U.S., which has mostly low-value coins, to countries like the U.K., which have coins in much higher values. Even if you logically know that the coin is worth more, you’ll associate it with change and spend it more readily. Being mindful of this bias can help you keep your spending low day-to-day.
Although you’ll want to bring gifts home for everyone, it’s good to figure out in advance exactly what you’ll spend on souvenirs. Make a list of the people you want to bring something back for, and determine what you’ll spend on each gift. It’s okay to spend different amounts of money on different people, but make sure you decide that in advance – not when you see the absolutely perfect gift for your brother that costs half your total souvenir budget.
Getting into the fine details of your budget can be exhausting, so you’ll want to tackle one part of it at a time. It might help to schedule a specific time each week or month that you’ll work on the budget, so that you’re committed to getting it all figured out.
