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How to Make a Vacation Budget

The Motley Fool logo The Motley Fool 11/23/2021 Natasha Gabrielle
How to Make a Vacation Budget © Provided by The Motley Fool How to Make a Vacation Budget A woman sitting on a swing between palm trees overlooking a lush tropical valley. © Getty Images A woman sitting on a swing between palm trees overlooking a lush tropical valley.

Vacations can be a lot of fun. But it's no secret that travel costs can add up quickly. Before taking a vacation, it's a good idea to outline a vacation budget. Doing this can help you avoid overspending, and it can help you determine if your trip plans are realistic for the amount of money you can afford to spend. This guide will show you how to make a vacation budget.

The idea of creating and following a vacation budget may sound overwhelming, but if done right, it can help you reduce stress so you're better able to enjoy your trip. You'll need to think of what trip expenses you'll have to pay and also prepare for unexpected costs that may arise. Here are some things to consider as you make your vacation budget.

Examine your finances before your vacation

Before taking a trip, it's a smart idea to examine your finances. Look at your checking account and savings account balances and current debt totals. You want to make sure taking a vacation makes sense for your current financial situation and financial goals. Examining your finances can help you outline a general dollar amount to start with as you make plans. If you're still working on paying off significant debt, for example, it may not make sense to take a lavish trip.

As you begin to make a budget, you should also think about your vacation timeline. If you have several months before you travel, you may be able to save more for your trip. Opening a savings account and automating monthly savings for future vacations is good practice. But if your trip is only a few weeks away, you may need to work with the money that you already have set aside.

Calculate major travel expenses

Some of the biggest expenses that come with taking a trip include transit and accommodations. These are usually the expenses we think to book and plan before a trip. You'll need to get to and from your destination of choice and find a comfortable place to stay. These are the easiest costs to plan for, and you should include these in your budget.

You can save money by being flexible on your destination choice or making different transit choices like driving a rental car instead of flying.

Factor in costs that occur during your trip

Some vacation costs don't occur until after you arrive; you'll begin to pay for them as you go about your vacation. These costs include food expenses, gas and tolls, and activity and entertainment costs. You may not think of these costs initially, but they can add up quickly. That's why you'll want to plan for these costs and include them in your vacation budget.

You can get creative to save money on some of these expenses. For example, buying snacks and essential breakfast items when you first arrive at your destination can help you reduce your total food costs. You can make a grocery store trip to stock up on these items. Try local restaurants while dining out for lunch and dinner to keep things exciting.

When it comes to activity and attraction costs, you can save money by researching before you go. Some attractions may be cheaper on specific dates. Some museums offer discounted tickets on a set weekday or a monthly free entrance day. These kinds of opportunities can help you spend less without sacrificing fun.

Don't forget about hidden travel expenses

Some trip expenses are less obvious when planning. Considering some of these hidden costs in advance can help you outline a more accurate trip budget.

These are some examples of costs that are easy to miss:

  • Airport and hotel parking fees
  • Checked baggage fees
  • Resort fees
  • Tips for service
  • Replacements for items you forgot to pack (medicine, toiletries, etc.)

Consider whether any of these expenses and fees will apply to your trip. If they do, factor these costs into your budget or find a way to minimize or avoid them.

As an example, some airline credit cards include free baggage allowance. Using an airline credit card to book your tickets can help you avoid paying extra baggage fees.

Prepare for additional unexpected costs

Finally, don't forget to include extra money in your budget for unexpected costs. Things happen, and some expenses may be higher than you planned or may come up unexpectedly. For example, you may need to pay for COVID-19 tests if you're traveling during the pandemic. Having extra money in your budget for these costs can eliminate stress and overspending.

We also recommend using a travel credit card when booking travel and charging trip expenses. You can accumulate rewards points, which you can later redeem for low-cost travel. Some travel credit cards include other perks that can make your trip more enjoyable, like airport lounge access.

Be sure to outline a vacation budget before you leave for your trip and consider as many travel costs as possible. Creating a budget and saving for your trip well in advance can make your travel experience better, and it can keep you from racking up debt.

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