Creating a travel budget is hard. Even for us and we consider ourselves “good with money”.
When we were planning a month is Chile or two months in Colombia, we had to carefully consider our budget just as much as spending 4 days in Paris.
Can you believe that I actually like to budget because it allows me to spend money without feeling guilty? I know exactly how much I can spend.
It’s freeing especially when I am trying to relax on vacation.
Why Have A Travel Budget?
Isn’t travel about ballin’ in a foreign country for Instagram? Then, why do we need to be ballin’ on a budget?
Admittedly – there is more to travel but I understand the need to over-indulgence on vacation. But let’s do it on a budget.
Budgets are important because they show up how much money we CAN spend not how much we shouldn’t spend.
I remember planning a trip to Las Vegas completely on credit cards. Luckily, my credit limits were a lot lower back then.
A budget allows us to enjoy our experiences to the fullest because we don’t have to feel guilty when we return home from overspending or spending money we don’t have.
Spending money I don’t have is stressful. Not my idea of rest and relaxation.
This post details how I budget for our trips. Whether a trip is one week or two months, I use the same process.
When we began traveling for our gap year, it was a TON of planning. The budget was the messiest part.
I wrote this post for those like me drowning in spreadsheets struggling to create and stick to a budget.
How Much Money Do You Need For Your Trip?
This is a hard question where the answer is – it depends. Annoying? Yes.
There are really two ways to determine how much money you will need to travel.
Depending on the amount of money saved and/or the desired destination.
Based on Money Saved
On perspective to save money first, then determine where and what type of experiences you would like to have.
This approach works for people who save constantly for a trip and are flexible on the destination.
When we were saving for our honeymoon, we focused on saving as much as we could every month- even before we had a location planned out. By the time our wedding came around, we were able to book a luxury all-inclusive hotel in Cancun, Mexico for a week.
Based on Location
Another approach to determine how much money you will need for a trip is based on the location.
This approach would look like – I want to visit X destination and have a moderately luxury experience. After researching, I estimate that will cost Y dollars. Thus, I will save Y dollars.
We used this approach on many occasions. When we were planning our anniversary trip to Paris. I knew that Paris is an expensive city. Since it was our anniversary in a romantic destination, I knew I want to enjoy a few expensive candlelit dinners and private accommodation.
We set the budget around the location and experience.
Either approach is great and one is not better than the other. You can see that for different times and travel experiences, we’ve personally used each approach.
The main thing is to be authentic to your travel style and goals. Don’t force expensive cities to be extremely budget – if that’s not your travel style.
How to Plan Your Travel Budget
Now that we’ve considered two approaches to set an amount to budget. I’ve gathered my 7 steps to planning your travel budget.
I use these in the first step in planning a trip because money is a critical piece of traveling. We travel a lot but we also know the reality of travel involves money.
While it doesn’t require a ton of money, there is some money required.
Step 1: Identify Big Ticket Items First
The first step is identifying what big items are you willing to splurge on. What is the most expensive tour, dinner, or activity are you definitely wanting to do?
When we visited Patagonia, I knew that I am a BEGINNER hiker and it would be the most expensive thing we did in our month of Chile.
I included an estimate in how much it would cost for us to hike 5 days in Patagonia separately from how much it would cost to hang out in Chile.
If you are planning something special that your trip is not complete without, be sure to look at that item first in your budget.
Step 2: Research Activities of Interest
The next step is to consider smaller activities that you must do but are not as expensive as step 1.
This could be a wine tasting or dinner on the beach.
If you are selecting a tourist destination, I’m sure there is not a shortage of information on activities to do.
Since there are a million things to do when traveling, narrow down your choices to what you will actually do. Then, estimate how much that handful of things may cost.
This is by far the
funnest most fun and hardest step because you get to delve into your destination. Learn about all the attractions and make strides to actually planning your next trip.
Step 3: Define Your Priorities
The third step is to identify your priorities. The reality is (unless you have unlimited money) is that you can’t do everything.
If a nice hotel is important to you, be sure to write it down.
If you enjoy a good hostel social atmosphere, be sure to write it down. (and use Hostelworld for the best selection of hostels)
My priority is good food so I will spend more on nice restaurants and save on a hostel or Airbnb.
This will help you identify what is important to you and what you are willing to compromise on.
Step 4: Consider Purchases Before The Trip
The fourth step is often forgotten by travelers and other blogs.
This section includes things you buy before the trip. This can include a good backpack for your South American backpacking adventure.
Or hiking gear for a week of camping and hiking in your campervan.
Or gearing up your car for a cross-country road trip.
No matter what you adventure, don’t forget to include pre-expenses in your budget category.
Step 5: Research costs of accommodation, transportation, and meals
The next step is also a fun one. Research! Even before finding this post, you probably have a Pinterest board full of travel inspiration.
This is the time to scan Skyscanner (*cracks up for puns) to get an estimate for how much the flight will cost.
For local transportation, I would only consider the costs to travel to/from the airport since most airports are outside the city center. Local transportation can include walking, public transportation, and Uber.
My favorite place to search for accommodation is Airbnb and google for hotels.
For this step, you can be as specific as you want. The more specific the better budgeting will be but I like to make for changes.
Step 6: Don’t Forget Visas and Travel Insurance
Next, include money for visas and travel insurance.
Finding visa requirements and fees is generally a simple process. Check out the travel.gov website, search for your destination, and follow appropriate country-specific links.
Insurance is difficult because there’s no right answer to what types and how much you need. But, we don’t travel without insurance – for our stuff and our health.
I always hear horror stories about lost luggage or critical accidents that happen on vacation.
Step 7: Incorporate Extra for Emergencies
The nest step is related to insurance and “just-in-case” money.
Most travel insurance companies will reimburse you for applicable charges. So you need enough money to cover the event in order for them to give you the money later (sometimes up to 90 days)
Emergencies happen. Plan a little extra money for if/when they do.
My rule of thumb is to have enough money for a last-minute emergency flight home. That is typically no more than $5,000 per person.
Creative Ways for Saving Money
Now that we’ve covered how to set a budget for your trip, you might be surprised that the number is a lot higher than expected. That is totally normal if you are planning a lot of activities.
Don’t worry. This section is full of creative ways to cut your budget back a little.
Before the Trip
You can cut costs before you even leave the house.
- Save Money on Flights and Long Distance Transportation. When flying long distances, you can fly into/ out of nearby larger airports. For example, in the US you can save money by flying into larger airport hubs like Atlanta, Los Angeles, and New York. The same works when you are landing in your destination. When flying to Asia, consider larger airport hubs like Bangkok and Singapore.
- Skip Countries with Visa Requirements. On a US passport, there are over 100 countries that we can visit without a visa or a free visa. Consider changing your destination to save hundreds.
- Consider using Reward Points for Hotels and Flights. If you are using travel credit cards (you definitely should), you can save money by booking with points. Kyle and I flew to Johannesburg, South Africa for $10 because we used Delta Airlines SkyMiles points. The flights would’ve easily costs $1,500 each.
Save While Traveling
Even while you are traveling, there are some ways to save a little money. You’ll save the most by preparing prior to leaving but not all hope is lost.
- Save Money on Meals. Choosing street food and cooking are easy ways to save money on food that requires little preparation. My favorite tip for saving money on food is to eat your biggest (and fanciest) meal for lunch where prices are cheaper than dinner.
- Skip ATM fees and Credit Card Fees. Having credit cards that don’t charge you international transaction frees is amazing. Another one is ATM fees, the Charles Schwab checking account doesn’t charge ATM fees worldwide. This was a game-changer in Argentina when ATM fees were $10.
Be Sure to Track Your Spending
Lastly, be sure to track how much you spent.
Or else, how will you know if you stuck to your budget.
For example, you’ve said that you will spend $50 per night on accommodation. Did you actually spend more or less?
It’ll also help you set a realistic budget for your next trip. The more you do it, the better you’ll be.