Travel is expensive, and it’s easy to under budget. Here’s how to budget more accurately for your vacation.
On any trip, you have four major expenses: transport, accommodation, food and drink, and activities. You also have two other expenses you might forget to include: travel insurance and incidentals (souvenirs, bottled water, and so on). Let’s break down each expense and how you can better prepare for each of them.
Transport to your destination is often the biggest cost. Flights—especially internationally—aren’t cheap. They can turn a cheap week away into a budget-blowing, once-in-a-lifetime trip.
Flight prices are relatively easy to budget for, though. Check websites like Kayak or Skyscanner to compare prices on a few dates you’re considering and book those that work best. You have to purchase the tickets in advance, so the expense is locked in long before you leave.
Transport after you arrive at your destination is trickier and can also be quite pricey. It’s helpful to consider:
- How you’re getting to and from the airport, both at home and abroad. Four, $30 taxi trips will cost an extra $120.
- How you’re getting around daily at your destination. Is there a good public transport network? If so, is there a daily unlimited pass? Are you going to have to Uber? Do a bit of research, and budget accordingly.
- If you need to rent a car. If so, be sure to include the cost of any insurance you might need along with the rental fee.
- If you’ll be traveling between destinations once you’re there. Train tickets are expensive and, like flights, better booked in advance.
The good thing about transport is, as long as you do your research in advance, you won’t be surprised by the costs.
Along with transportation, where you stay is another significant cost of traveling. Again, though, as you’re most likely to book it in advance, it’s predictable.
The first thing to do is to decide what kind of accommodation you want. Generally, hostels are the cheapest, Airbnbs are somewhere in the middle, and hotels are the most expensive. You can usually get a hostel bed for about $25 per night, an Airbnb for around $100 per night, or a hotel room for close to $150 per night (of course, there are exceptions to all of these).
Unlike transportation costs—if you’re willing to take the risk—hotel stays generally get cheaper the closer to the booking date you get. You can get great same-day deals, but that means you have no idea where you’ll be staying in advance. And, if things go wrong, you could be stuck paying big bucks for a lousy hotel room. For more tips, check out our article on saving money on accommodations when you travel.
Unless you like a bit of adventure during your travels, we recommend avoiding the riskier strategy and booking your accommodations in advance. It locks the cost into your budget and makes it much easier to predict your spending. If a super-cheap deal comes up, you can always check the cancellation policy on your hotel booking—you can typically cancel up to the day before your stay begins.
Food and Drink
Now we’re getting into the more unpredictable expenses. How much you spend on food and drink can vary enormously. I’ve had days where I’ve spent hundreds, and days where I’ve spent less than $10—on the same trip! Even in more expensive countries, you can usually eat cheap. But alcohol can drain your wallet in the most budget-friendly of locations.
When it comes to budgeting for food and drink, the best predictor is past behavior. Do you like big meals and bottles of wine? Or is a sandwich in the sun all you need? Decide where you fall on the spectrum, and then do a bit of research. Most restaurants have their menus and prices online now. You can also use a cost of living calculator to see how your destination stacks up when compared to your hometown.
Remember to include coffees and snacks in your calculations—-they can easily add $10 a day.
Another thing to look for while researching is whether tax is included and if it’s a tipping culture. I was a bit shocked my first time in America when a $10 dish was actually $13 after adding the tax and tip.
Also, consider your drinking habits. If you have a few beers, you’re much more likely to have a few more. Don’t budget for three beers a day if you know you’re more likely to drink eight on at least a few days. It’s better to be pleasantly surprised at the end of your trip than dipping into next month’s rent money.
Once you’ve got a rough number—say, $10 for breakfast, $15 for lunch, $30 for dinner, $20 for drinks, and $10 for coffee and snacks—add 20% or so as a buffer. If you think you’re going to spend $85 a day, round it up to $100 to be on the safe side. This way, if you do decide to have a few more cocktails, you have some flexibility.
The final major cost you’re likely to have is the activities you’re going to do. Tickets to major tourist attractions can add up.
You have a few options when it comes to budgeting for activities. You can plan your trip and your budget in advance, or you can budget a set amount per day and decide what you’re going to do when you get there. If you go with the first option, things are pretty predictable. Just make sure to tack on an extra 10% or so for any tips or random activities you decide to do on a whim.
If you go with the second option, the best thing to do is research the cost of the kind of stuff you like to do. Then, multiply the average price by the number of days you think you’ll want to do something—but again, err on the side of over-budgeting.
Travel insurance is something a lot of people forget about, but you absolutely need to factor it into the cost of your trip. Thankfully, it tends to be quite cheap. You can easily find good plans for less than $100.
When you travel, things always come up that you forgot to include in the budget. It’s usually little things, like painkillers, souvenirs, or postcards. However, if you don’t factor these in, they can add up and surprise you.
I take whatever amount I’ve budgeted for and add another 20%. Combined with the slack I’ve already factored in for food, drinks, and activities, this provides a generous miscellaneous amount I can dip into if necessary.
Another option is to just pick a flat amount, like $100, for unplanned expenses. As long as nothing drastic crops up, that should be more than enough. And if something big does happen, it’s probably covered by your travel insurance.
General Budgeting Tips
By now, you should have a pretty solid idea of what your trip is going to cost, but here are some more tips that might help you save even more.
If you want to keep track of your budget, create a Google Sheet or Excel Document before you leave. Once you’re there, you can use an app like Splitwise to track your day-to-day expenditures and make sure you’re not going too wild.
Be realistic when making your budget. Don’t expect to get by on $50 a day in New York, no matter what you make the numbers in your spreadsheet say. Always err on the side of budgeting too much for something rather than too little.
Watch exchange rates, as they can change. Sometimes, they work in your favor, such as when you’re visiting Asia. Other times, they can work against you, like if you’re vacationing in Scandinavia, for example. Don’t make the mistake of assuming things cost the same everywhere.
Prices can also change quickly. There’s often a discount when you book things online or in advance. Just because the price was one thing when you researched it a month ago doesn’t mean it’ll be the same when you get there. Always double-check any big budget items.
Calculating an accurate travel budget might be boring, but it can make your trip a lot easier. It allows you to save the necessary amount and take the vacation you want, without stressing about the cost.