How to Create a Vacation Budget and Stick to It
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Whether you want to feel the sand between your toes or head to a mountain getaway, vacations can get expensive quick. Creating a vacation budget is essential because it can prevent you from racking up costly debt and help you stretch your money further so you can have more fun.
Learn why you need a vacation budget, how to make one, plus tips to make sticking to your travel budget easier.
Why You Need to Make a Vacation Budget
Having a vacation budget can prevent you from overspending, incurring costly debt, and experiencing vacation remorse once the fun is over. A survey by GoBankingRates found that out of 1,037 Americans, 33.75% overspent on vacation.
According to a report by Elite Personal Finance, the average cost for a week's vacation for two people traveling in the U.S. is around $3,116.
Charging vacation expenses on credit cards can make you incur a heavy debt burden. You end up paying much more for your vacation than originally planned because of expensive interest.
For example, let’s say you charge the average cost for a couple of $3,116 on a credit card with the national average rate of 24.20%, and it takes you two years to pay it off in full. It would cost you about $845 just in interest!
I’ve actually made the mistake of charging up credit cards on vacations and it is very costly.
So, you see creating a vacation budget and sticking with it is vital to your financial well-being.
How To Budget for a Vacation
Travel budgeting doesn’t have to be complicated. Here is how to create a vacation budget with ease:
Figure Out What You Can Actually Afford
The first step to creating a vacation budget is determining what you can afford. You don’t want to start planning a majorly expensive trip if you don’t have the funds for it. Do you already have a vacation savings fund or do you need to save more for your trip?
If you already have a decent vacation fund, you can budget according to what you have saved. If you do need to save, you need to create a new monthly budget so you can allocate more money to your vacation fund.
Sit down and see if you can cut expenses in other areas so you can save money faster.
2. Pick Your Destination
Now comes the fun part. It’s time to pick your vacation destination. Of course, your budget will determine the destination to some extent depending on the costs of where you want to go. However, you can save quite a bit by traveling during the off season rather than peak season. So, keep that in mind when picking your place.
If you’re not quite sure where you want to go, and you're traveling with a spouse or family, brainstorm ideas together. That way everyone will enjoy your much needed vacation time together.
3. Calculate Your Costs
Once you decide on a location, it’s time to start researching to calculate your costs. Use sites such as booking.com or priceline.com to find discounted flights, hotels, and car rentals.
You can choose the dates when you plan on taking your vacation to get an idea of the cost. Of course, prices can change if you don’t book immediately, so keep that in mind as well.
Make sure you include other costs such as food and entertainment. These can add up fast, so it’s important to figure out how much of your vacation budget you can allocate to these categories. If you aren’t flying, then you will need to include fuel expenses too.
Use this AAA Gas Cost Calculator to figure out how much it will cost you in fuel. Now that you have an estimated vacation budget, proceed to the next step to start saving.
4. Set Your Savings Goal and Vacation Date
Once you have everything decided and costs calculated, it’s time to set your savings goal and vacation date. If you have some money saved towards your vacation, deduct that amount from the total cost of your trip to figure out how much more you need to save.
If you are starting from scratch, take the total cost of your trip and divide it by the number of months until you want to take it.
So, if your trip costs $3,500 and you want to go by next year, you divide $3,500 by 12 months. That means you will need to save $291.67 a month, or about $67.30 per week.
Try a money-savings challenge to make saving easier and more fun. You should also open a separate savings account dedicated to your vacation fund so you don’t dip into it beforehand.
Another way to make saving easier is to set up automatic deposits every time you get paid. This will help you save without much effort at all. Grab the free savings tracker below to help you track your vacation savings fund!
5 Tips To Make Sticking to Your Vacation Budget Easier!
Knowing how to budget for a vacation is essential, but sticking to it is the key. Use these five top tips to make travel budgeting a breeze:
Pay Off Your Major Costs in Advance
If you reserve your major costs on a credit card, such as hotels and plane tickets, then make sure you pay them off as soon as possible. This will help you stick to your vacation budget and not pay expensive interest over a long period of time.
2. Use Prepaid Cards and Cash when Possible
Credit cards make it way too easy to overspend on vacation. The buy now pay later mentality will have you racking up debt faster than you realize. Studies found that people tend to spend more when using a credit card as opposed to cash.
So, opt for using cash or prepaid debit cards whenever possible. This will prevent you from overspending and will help you stick to your vacation budget.
3. Track Your Spending to Ensure You are Within Your Vacation Budget
Tracking your spending is essential to sticking to any budget. It helps you see exactly how much you are spending and whether you are going over budget.
You can use a spending journal or create a spreadsheet to keep track of all of your transactions. Try to do this daily to keep a close eye on your expenses. It simplifies keeping your vacation money separate from your other funds so you don’t overspend.
4. Find Fun Free Things to Do
No matter where you decide to go, more than likely, there are fun things to do that are completely free. You can type in free things to do and your destination and you will have everything listed out for you.
Check out free local events and museums, or find beautiful parks to visit. There are plenty of things to do without spending a lot of money.
5. Find Ways to Save
You can stretch your vacation budget further by finding other ways to save. If you’re heading to a popular city destination and want to see attractions such as theme parks, zoos, or aquariums, check out CityPASS for ticket discounts. Groupon is another excellent site to find coupons and discounts for everything from restaurants to local attractions.
You can also opt for a hotel or a place to stay with a small kitchen to cook some of your meals to save money. Eating out is very costly, so even cooking a meal or two per day will save you a bundle.
If you are traveling to see friends and family, consider asking if you can stay with them and save on hotel costs. Don’t forget that traveling during the off-season will cut costs considerably, so research your destination to see if you can travel when it’s cheaper.
Create a Vacation Budget and Still Have a Fantastic Trip!
Now you know how to budget for a vacation. Travel budgeting doesn’t have to be a bummer. You can still have an amazing trip on a budget. Remember, it’s always best to save rather than charge expenses on credit cards and find fun, free things to do so you can see more sites during your trip.
Don't forget to track your spending to ensure you stick to your vacation budget and don’t experience vacationer's remorse once the fun is over.