With some smart planning and budgeting, many people find that their dreams of going somewhere new become much more attainable than they thought. Treat your travel plans as you would treat any other big financial project — do not treat them as impulse buys. Affordable travel plans require smart financial planning to help achieve those goals. This includes defining a clear objective (destination, length of stay, and time period for the trip) creating a realistic timeline, and determining which areas of spending will provide the highest priority (i.e., protecting daily necessities). Additionally, smart travel planning requires monitoring costs associated with your trip beyond just flight costs, hotel costs, etc., including transportation costs (local transportation, taxis, etc.), meal costs, and entrance costs to attractions, etc. When a person has a clearly defined plan, they will be able to minimize the chance of having to take on debt, experience less stress in their preparation, and make informed decisions regarding where they want to visit and when.
1. Define Your Travel Objective with Clear Numbers
Your travel objective must be specific in terms of destination, duration of trip, and the preferred travel window. Travel objectives with unclear specifics will have unclear methods of saving for the trip.
A solid plan begins with estimating the complete cost of the trip, and then provides a cushion to cover potential price increases. The following are examples of cost categories to use:
- Transportation – flights, trains, gas, taxi/airport transfers.
- Lodging – hotels, rental properties, taxes, cleaning fees.
- Daily Spending – Food, Local Transportation, Activities.
- Travel Protection – Insurance, Emergency Funds.
- Documentation – Visas, Passports, Required Fees.
Once the estimated total cost of the trip is determined, it is easy to determine how much you need to save to reach your goal. Instead of saying “I need to save more for my vacation,” a more effective way to state this goal would be “I need to save $1200 over the next 8 months.”
2. Develop a Travel Budget That Will Allow You to Pay Your Monthly Bills.
Your travel budget should fit around your rent, grocery bills, school/work commitments, and regular savings contributions. The best way to create a travel plan is to ensure that your travel plan does not compete with your other monthly obligations.
A practical method to develop a travel budget is to establish a fixed monthly amount to contribute towards your travel savings based upon the amount of disposable income remaining after you meet all of your monthly needs. Developing a budget will typically allow you to identify areas of unnecessary spending, known as “spending leaks.” Examples of spending leaks include making multiple, small purchases throughout the month that add up quickly.
Practical methods to budget for travel include:
- Creating a separate “travel” account or wallet to help you keep track of your funds and to prevent the temptation to spend them elsewhere.
- Implementing weekly spending limits to ensure you remain within your monthly budget.
- Establishing a “no-spend” rule for one or two categories of spending each month.
- Conducting a short review of your spending each week to prevent unexpected expenditures at the end of the month.
3. Save Money Through Automated Transfers and Smart Timing.
Savings will occur more frequently and consistently if the savings occurs automatically. Setting up automatic transfers to a dedicated “travel” fund on the same day you receive your paycheck will reduce the likelihood that you will spend the money instead.
Developing a smart savings system involves the following:
- Making smaller, consistent deposits to your travel fund (e.g., $10-$20 per week).
- Using the round-up feature of your credit card or debit card to automatically deposit a portion of your purchase into your travel fund, if your bank offers this feature.
- Depositing additional amounts from gifts, tax refunds, or any other source of extra income you may have.
Choosing the right time to book your trip is also important. By being flexible with your travel dates, comparing different airline routes and pricing, and booking your travel arrangements early enough to avoid paying last-minute fares, you can reduce the overall cost of your trip. Booking your trip during the off-season will also typically reduce the cost of your accommodations and activities while providing similar quality of service.
4. Manage Your Costs Prior to and While Traveling.
Managing your costs prior to and while traveling is key to developing a travel plan that is affordable but still allows you to enjoy your trip. Managing your costs too aggressively can turn your trip into a constant worry and restrict your ability to enjoy yourself.
Prior to your trip, you should create a daily spending limit and determine which aspects of your trip matter most to you. For instance, you may prefer to spend more money on dining out and less on accommodations, or vice versa.
While you are traveling, managing your costs will be easiest when you have developed a short routine to follow. The following elements will help manage your costs while traveling:
- Tracking your spending once per day using a notes app or simple spreadsheet.
- Using public transportation, walking, biking, or any other form of free transportation.
- Limiting the number of “paid” activities you engage in during your trip, and limiting the number of expensive activities you participate in.
- Keeping emergency money separate from your spending money.
By doing so, you will be able to maintain your budget while allowing yourself to enjoy your trip and the opportunities it presents.