How To Create A Travel Budget That’s Right For You

According to the U.S. Travel Association, people in the United States spent $104 billion on travel in September 2023 alone. Travel is popular, but it feels like a luxury for many Americans.

But that doesn’t mean only those with money to burn can hop on a plane, boat or train to a new destination. You can plan a vacation that fits your finances by making – and sticking to – a travel budget.

How To Travel On A Budget

Looking at your current finances, you may wonder if taking a vacation is even possible. But with proper planning, you can create a personalized travel budget that allows you to fulfill your wanderlust without breaking the bank.

These tips will help you find ways to save money on travel costs and spend your vacation funds wisely in the early stages of planning your trip.

Know What You Can Afford

Before any concrete travel plans are made, you first have to analyze your spending at home. If you don’t have a clear idea of what money is coming in and going out, how can you determine your travel budget?

This is where a personal budget comes in handy. Being more intentional about your finances will help you see areas where you can spend less and save more. Once you have a clear idea of your financial health, you can use any money left each month or in your savings to build your travel fund and budget accordingly.

Begin Planning Early

The more time you give yourself to plan your trip, the more time you have to find deals and discounts on travel-related expenses.

Early planning also gives you more time to set aside money for a vacation fund. This can help not only alleviate the financial burden a vacation often presents but also give you more spending money for the trip. That means more potential adventures, souvenirs and whatever else you’d like to enjoy.

Book Trips At The Right Time

Along with booking trips as early as possible, it’s wise to be mindful of when you’re booking them. For example, airfare will likely go up in price the closer you get to your travel dates.

The price of plane tickets also fluctuates depending on the day of the week, so knowing the cheapest time to book a ticket is key to saving. You can also use tools such as Google Flights to track the cost of flights to your intended destination so you can book when there may be a price drop.

Consider Traveling In The Off-Season

The off-season will vary depending on where you’re going, but avoiding peak travel times is a great way to save money. Everything from flights to hotel rooms to amusement park tickets are typically less expensive during off-season and experience a spike in price during peak season.

Off-season travel is usually less crowded, too, which is always a plus.

Determine What’s Worth The Money

You’ll want to explore many experiences during your vacation, but you should be mindful of your budget. When you look through the possible fun side quests during your trip, consider how much money you have for these activities and ask yourself how much you actually want to do them.

For example, a guided tour might not seem too expensive at $18 per person, but for a family of five, that adds up quickly. With a bit of research and planning, you could plan out a tour yourself for free and use that saved money for other possible activities.

Use Credit Card Rewards

Going into credit card debt for travel isn’t a great idea, but using a credit card that offers travel points or rewards could be beneficial for your travel budget, as long as you can manage your credit responsibly.

Several credit cards offer rewards or points, and many are specifically designed to help credit card holders earn travel perks. By finding the right travel credit card, you can use it wisely and rack up rewards that can go toward savings when booking lodgings, transportation and other travel-related expenses.

Look At Spending From Past Trips

If you’ve traveled before, examining your spending habits on those trips can help you better prepare for your next one.

If, for example, you spent $100 a day on food during your last visit to Europe, you can plan for about the same amount or even a bit more on your next one. This helps you establish a realistic budget so you don’t under-budget and overspend.

5 Travel Expenses To Include In Your Budget

After you’ve figured out how to budget for a trip, it’s important to know where you’re going to spend the bulk of your travel budget so you can allot specific amounts for each area.

1. Transportation

Typically, the travel method you use to get to and from your destination is going to be one of the most costly expenses, especially if you’re flying.

But you also have to consider the type of transportation you might require once you’ve arrived at your destination, including public transportation, rental cars, taxis and other methods of travel. Researching the best way to get around where you’re going will help you budget appropriately for transportation costs.

2. Lodging

Whether you’re staying in a hotel, motel, hostel, Airbnb or other accommodations, lodging may be another sizable expense of your trip.

Early planning will give you time to research your options around your vacation destination and make the best decision not only for your budget and preferences. Where you decide to lodge can also impact the number of options for dining, transportation and other factors that could impact your budget. The more research you do about your potential lodging and surrounding area, the better it will be for your wallet.

3. Dining

For travelers who are foodies, experiencing the cuisine of whichever area you’re visiting is a significant part of the vacation. For others, food isn’t a concern to them when compared with other aspects of a trip.

Regardless, meals have to be factored into your travel budget. Depending on your destination, you may or may not need to consider tipping, as it’s not practiced everywhere outside the United States.

4. Activities

How you fill your days on a vacation often involves spending money. Whether it’s a day trip, museum visit, water adventure or bus tour, these can range from affordable to very pricey.

Set aside a daily amount you’re comfortable spending on activities and book as many of them ahead of time as possible. This will help alleviate unexpected expenses with price points that may result in overspending.

5. Miscellaneous Costs

Souvenirs, a second coffee in the afternoon or a poncho for that unexpected downpour are a few examples of things you might spend money on while on vacation that are outside of the major expenses.

Going into your trip with a daily budget that allows these miscellaneous expenses will help you feel less guilty about spending and can even let you splurge a little bit.

The Bottom Line: A Travel Budget Can Help You Plan A Trip

Planning a vacation can be stressful even without worrying about money, but vacations don’t have to be ridiculously expensive. With the right travel budget, you can enjoy your vacation knowing you have enough funds to fully cover your trip.

Download the Rocket Money^SM app today to monitor your finances and create a travel budget so you can take the trip of your dreams sooner rather than later.