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How to Plan a Vacation on a Budget

After two years of a global pandemic and a seriously stifled travel schedule, our family is ready for a vacation. As a result of being confined to our home way too much during the pandemic lockdowns, our family (like so many others) decided to buy a bigger house with more space and a larger yard. We figured, if this pandemic is going to continue for an indefinite amount of time, we might as well have more room. However, with a bigger house comes a bigger mortgage and more household expenses. So, this year we plan to go on vacation but it won’t be an expensive vacation. This time we will be travelling on a budget. This article outlines everything you need to know about how to plan a vacation on a budget. 

How to create a vacation budget

You can think of a vacation budget as a financial plan for your vacation. It’s a tool that can be used to keep you from coming home with a ton of vacation debt. To create a vacation budget, follow these steps: 

Determine where you want to go

The first thing you need to do when creating a vacation budget is to figure out where you want to go. A family road trip or a camping vacation will require a smaller budget than an all-inclusive dream vacation to Bali. 

Your transportation and accommodations are typically the two most expensive items when planning a vacation. So, once you know where you are going and whether it’s going to be by train, plane, or automobile, you can begin to fill in the rest of your numbers. 

Create a list of expenses 

Here’s a list of the main items you should consider in your vacation budget:

  • Transportation (gas, train or plane ticket, standard car rental, airport charges, parking)
  • Accommodations (hotel room, all-inclusive, air BnB, camping) 
  • Food (restaurants, groceries) 
  • Entertainment (amusement parks, broadway show tickets, football games, museum entry fees)
  • Shopping (souvenirs) 
  • Rentals (if traveling with kids you might need to rent a stroller or other baby items)
  • Preparation (new passport, visa, suitcase, clothing)  
  • Emergency fund (in case the car breaks down or something else goes wrong) 

Estimate the cost of each expense 

You can begin to estimate the costs of all of these items by searching online or calling different providers. It makes sense to comparison shop on the different items so you can try and find the best deal. For instance, check out the price of an airline ticket with different airlines, using different search engines. 

You can use a pen and piece of paper, an excel spreadsheet, or a free online budget template to keep track of your numbers. 

Set a monthly savings goal 

You have an estimate of how much you will need, you can determine how much you need to start saving. Hopefully, you’ve given yourself many months to plan and save and you can divide the total estimated cost by the number of months you have left. This will give you the amount you need to save per month. As a simple example, let’s say you estimate your total cost to be $2,000 and you will be traveling in six months, $2,000 / 5 = $400 per month in savings.   

If the monthly savings amount is too high, you can either postpone your vacation so you have longer to save or, you can adjust your budget. In some instance, you may to rethink your destination and choose something closer or a less expensive accommodation. Another option is to find a way to make more money. Maybe you have the option of taking on a few extra shifts or perhaps you can make more money with a side hustle. 

Open a vacation savings account

Once you’ve finalized your budget, you can open a free savings account that is just for your vacation money. Each month, funnel your vacation savings into your account and then keep your hands off it. Keeping it in a separate account should help to reduce the temptation to spend it on anything else.

Tips for handling unexpected expenses 

While no one wants to think of anything going wrong on their vacation, we can’t predict the future. The only thing we can control is how we prepare for an unexpected event. This is why an emergency fund is listed as one of the items you should budget for. A vacation emergency fund is meant to add an extra layer of financial protection in the event that something goes wrong. This way, you don’t completely blow your budget and come home with a few souvenirs and a maxed-out credit card. No one wants to pay for a vacation for months after they’ve returned home. 

It’s also imperative that you have the proper insurance before traveling. It’s an additional upfront cost but it will give you peace of mind and, you’ll be very happy to have it if anything goes wrong. 

(SEE ALSO: How a Chase Sapphire Reserve car insurance claim saved my mom nearly $900)

Affordable travel tips to stay within your vacation budget 

Here are a few tips to consider to help you stay within your vacation budget:

  • Comparison shop. Don’t accept the first offer. Spend some time comparing different airlines, rental car companies, or accommodations to see where you can get the best deal. 
  • Use points or rewards. If you collect points or rewards with your travel credit card consider using these to help pay for your flight or accommodation. 
  • Travel in low season. If you can swing it, consider traveling in the low season. You can usually get good discounts on transportation and accommodations and, as an added bonus, you don’t have to deal with the summer break or Christmas travel crowds. 
  • Use public transportation. 
  • Avoid tourist traps. Big cities with all of the top tourist traps tend to be the most expensive. Traveling to less popular destinations can often be cheaper. (SEE ALSO: How to Buy Statue of Liberty Tickets (without getting SCAMMED))
  • Be flexible. If you can be a bit flexible in terms of your departure dates, you can often find a better deal on your flight or accommodation. Traveling midweek can also sometimes result in cheaper flights.
  • Cook for yourself. Eating out is expensive, if you can get a hotel or Airbnb with a kitchen, consider buying groceries and cooking for yourself. 
  • Research free activities. Often museums or zoos offer free entry on a particular day of the month. Spend some time researching free entertainment before you leave. 

You can plan a vacation on a budget 

You can still have an amazing vacation on a budget. You may need to start saving earlier or adjust your destination to match your numbers but, if you can get creative and be a little bit flexible, your budget vacation can still be everything you want it to be.  


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