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Sunday, April 21, 2024

How to travel on a budget

How to travel on a budget

03.08.2023

From tropical beaches to quaint towns, there is so much world to explore. But it sure can get pricey fast. 

Between air travel, accommodations, transportation, tourist traps and souvenirs, the array of expenses associated with traveling can quickly get out of hand.

Creating a realistic and sustainable travel budget is one of the best ways that you can prepare for a trip so that you can be wholly present on your vacation. After all, your trip should be stress-free and relaxing; the last thing you need is to see “declined” on a screen when you swipe your card – especially if you are traveling abroad.

Following are tips and tricks for creating a travel budget that feels fulfilling rather than restrictive, all while helping you reach your overall financial goals. 

How to create a travel budget

Think of your travel budget as your ultimate travel companion – always down for an adventure, with you through the highs and lows, and also keeps you grounded and secure as you navigate new countries and experiences. 

When you hear the word “budget,” you may think “restriction” – but this isn’t the mindset we want to have as we create our travel budget. Rather, the budget allows us to be fully present during our travels because we aren’t stressing about finances. 

The only restricting your budget should really be doing is keeping you from making purchases that might not ultimately align with your personal financial goals. A good travel budget should allow you to make room for your travel essentials and priorities. So rather than thinking of your budget as a “stop sign” that gets in the way of your fun and adventures, consider it the steering wheel that allows you to take on new experiences with control and security.

Identify your “must-haves”

The first step to creating a sustainable travel budget is identifying your travel must-haves. These are the things you must do, see, or buy during your travels so that you feel like the trip was as personally fulfilling as possible. 

Whether it’s going to the top of the Eiffel tower, taking a sushi tour through Japan, buying a designer handbag in Italy, or flying first class for the first time ever, these are the experiences that will be prioritized in your travel budget. 

Identify your expenses

Next, write down all of your travel expenses and their estimated costs. Whether you prefer to plug these numbers into a spreadsheet, fill out a budgeting app, or write them down with a good ol’ fashioned pen and paper, identifying all of your anticipated expenses will give you the most realistic budget for your trip possible. 

From airfare to baggage fees to accommodations to food, the more detailed you can be the better, as it will help you create the most specific budget possible. Don’t forget to include your financial priorities.

This is where it’s especially important to be realistic about the amounts you will need to spend. While a month-long European tour for $1,000 sounds great in theory, it’s definitely not realistic and is not setting you up for financial success. 

Once you have identified all of your travel expenses, add up all of the costs; you now have a detailed and realistic budget for your upcoming trip. 

Set aside money in case of an emergency

You know the age old adage, “if it can go wrong, it will go wrong?” Never has it been more relevant than while traveling. Even with all of our detailed planning, sometimes unexpected emergencies – and expenses – arise. 

From dropping your phone in the ocean to twisting your ankle on a day hike and needing to go to the doctor, it's better to have some emergency money set aside to accommodate unexpected expenses. 

Even just an extra $50 set aside in a secure cash account can create peace of mind while you are traveling and prevent you from having to go over budget due to an emergency. 

Determine how much money you feel comfortable setting aside for emergencies and add that amount to the final number from step two to find your final budget amount. 

Once you have figured out exactly how much money you are planning to spend on your travel, you can start to save for the upcoming trip. Consider using the various financial tools available through Empower to set yourself and your travel budget up for success. These tools show you exactly how much money you are earning and spending each month so that you can determine how much you can afford to contribute to your travel budget every month. 

How to stick to your travel budget 

Now that you’ve finished your travel budget, here are tips for sticking to it so that you can enjoy a financially stress-free trip. 

Keep track of your expenses 

Keep your budget on hand as you travel and update it as you go. 

Tracking your expenses while traveling may not sound like the most fun way to spend your time; Empower’s budgeting tool can make tracking your spending quick and easy from your phone or computer. In real time, you can track your spending and see if it's over or under what you budgeted. 

Find ways to stay motivated

When traveling, it is easy to get swept up in the excitement of jet setting to faraway destinations, dining at top-tier restaurants, and picking up souvenirs at every stop. If we aren’t careful, this can end up kicking your budget to the curb. 

Find ways to stay motivated to stick to your budget even when tempting opportunities to blow your budget arise. Whether it’s writing your larger financial goals in a note on your phone and revisiting it when you get the urge to splurge, reviewing your budgeting spreadsheet daily, or asking for your travel buddy to hold you accountable, look for ways to stay motivated to stick to your budget even when tempting opportunities to go over budget arise. 

Review how your budget performed 

So you’ve made it back home after the trip of your dreams and are looking for an excuse to put off unpacking. Well, we've got just the thing. 

Take this opportunity to whip out your budget spreadsheet and review how your initial budget held up to your actual travel spending. As you compare your estimated expenses with your actuals, ask yourself the following questions: 

  • Were there certain areas where you consistently overspent or underspent?
  • Were there certain necessary expenses that you didn’t plan for in your initial budget?
  • Were there any purchases that didn’t meet your expectations or you wish you hadn’t made?
  • If you overspent, what do you have to do now to get your overall budget back on track?

Answering these questions can help you gain clarity on where your budget could use improving so that you can better prepare your travel budget for future trips.

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The Currency editors

Staff contributors

The CurrencyTM, a publication from Empower, covers the latest financial news and views shaping how we live, work, and play. We keep you current on ways to plan, save, and invest for life.

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