Ah, the sweet sound of vacation– isn’t it what we all want and need? But, does the price tag associated with taking a vacation cause you to do the opposite of relax? This may be the case, but it doesn’t have to be.
To help avoid this sense of dread, we have compiled a list of things you can do to budget for a vacation. This way, when you are done sipping Mai Tais and getting some sun, you won’t feel burned by your bank. In this blog post we show you how to budget for a vacation.
What Do Vacations Typically Cost?
The different types of vacations you can take are practically limitless, which can cause costs to fluctuate greatly.
However, according to data from the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, the average cost of a four night domestic trip in the U.S. has been calculated to be $581, whereas the average cost of an international 12 night trip is around $3,251.
Costs are rising, and the main driver of vacation costs is transportation, which the survey reports accounts for 38.5% of the total spend. After transportation, you can then expect to spend the most on food and entertainment, followed by lodging.
The surprising truth of it all is that people are willing to go into debt to go on vacation. A Vrbo survey from 2019 found that 37% of Millennials and 27% of Gen-Xers were willing to go into debt to get away. This number is compared with 15% of Baby Boomers.
That being said, it’s best not to go into debt for any reason, including vacation. Instead, try to follow some of the following suggestions to help cut costs and plan for a vacation that is within your budget.
How to Budget for a Vacation
When the destination travels won’t stop calling your name, and it’s time to book your trip, keep in mind the following ideas so that you can save as much as possible while still having a great time.
Set a Maximum
To get started with a budget, it’s a solid idea to have a maximum amount in mind. When you have your maximum budget set, then you can plan your destination in accordance with the funds you have available to go on the trip. This means that you are planning your vacation according to what you can afford, rather than trying to mold your budget into a vacation you can’t afford (which is what typically can lead to debt or being stressed about money while on your trip).
To know what your maximum vacation budget is, consider your annual income and your monthly budget (i.e. how much you can take out of your monthly and multiply that between now and when you want to get away).
If you plan to take a few vacations during the year, then figure out your maximum annual budget and break it down according to where you want to go and for how long. Having these figures readily available will allow you to know whether or not your vacations are financially feasible or if you have to pivot and adjust.
Once you have your maximum budget set, you can start to break down the costs by categorizing expenses. For this step, it may be helpful to use a digital tool to track expenses, or of course, you can always default to a Microsoft Excel spreadsheet.
Some categories to consider include:
- Childcare fees
- Activity costs
Outline Big Expenses
The easiest costs to estimate are likely going to be the big cost drivers, such as transportation and lodging. Will you need transportation once you get to your destination? If so, factor in these costs, too.
By spending some time on the Internet, you can locate good deals and/or vacation packages. If a hotel is not within your budget, try services like Airbnb or Vrbo, where you can rent a room or entire house in your vacation location. Another benefit of renting a house or apartment is that you have access to a kitchen, which means you can cook more for yourself and save on food and dining expenses (which, as you can recall, is the second most expensive category on vacation).
Factor in Extras
While the big costs are typically known, the little extras also add up. Yet, these items are less easy to estimate as they vary more greatly. Even if you don’t know the exact cost for these items, you can at least set the maximum amount you have leftover after the big expenses so you are able to remain within the budget you set.
The extras include considerations like:
- Public transportation
- Food and dining
- Special gear for adventures
- Logistics costs (visas, passports, vaccinations, etc.)
- Cell phone bills
- Costs from home (i.e. house or pet sitting)
One of the best ways to save on taking a vacation is to plan your trip early. Although it may be hard to know exactly where you’ll be in a few months, you can pay a little more for travel insurance in case plans change (since you’re likely already saving on overall booking costs).
Searching early means that you have more availability (less demand = less cost) and you can avoid traveling during peak seasons. Planning early also means that you have more time to determine how much you have to save each month in anticipation for your getaway.
More Costs to Consider
Once you have your budget set and your plans in motion, keep in mind that there are some additional costs that could arise.
Don’t forget to have some extra funds set aside for:
- Foreign transaction fees and currency conversions
- Potential emergencies
- Hidden fees associated with accommodation
Cost Effective Options to Catch a Break
If your vacation budget is quickly ballooning, then you may want to consider alternative vacation options before catching that flight or sailing the seas.
Instead, you can still indulge in respite while spending less if you choose to opt for a staycation, camping, or a house swap.
Your Adventure Awaits!
When you need a vacation, finances shouldn’t stop you from being able to take one. When you work backwards from your budget, you can choose a vacation based on what’s within your affordable range, and not the other way around.
By operating this way, you can make the most of where you go by resting assured that you have the finances to cover your costs, which will surely alleviate stress on your journey that’s intended for fun.
Although costs can surely add up quickly, with adequate planning and applying cost cutting techniques, you can make your vacation vision a rewarding and memorable reality.
Image(s) or Footage (as applicable), used under license from Shutterstock.com.