My wife and I have learned a lot while traveling (we are currently on an extended trip) and we’d like to share some tips to make your next vacation, no matter how long in duration, as financially viable as possible.
1) Have a plan
While this may seem like common sense, many people that travel lack a plan. What do you want to do on the trip? Are there certain activities you’d like to do? What level of comfort would you like while traveling? The plan should be flexible, you want to enjoy yourself on vacation and be able to adjust accordingly. When you are armed with a good plan everything else will fall into place!
Number of people: 2
Time of year: Summer
Duration: 1 week (7 days)
Shopping for souvenirs/gifts: Yes
2) Make a Budget
To be honest, I am not a fan of overly detailed budgets. I like to have some flexibility and not get caught up in the details. The way I usually like to do things is to take a time period of a few days, 1 week, a month, etc and find the costs associated with what I’d like to do on the trip. This references tip #1, have a plan! I then use that period of time to come up with a budget number for the duration of the trip.
Using the example above, flights will cost $2400, a hotel costs $170 per night, meals should be around $100 per day (lunch and dinner, hotels may include breakfast) and there are many day trips available that cost $200 for two people. Most people also buy some souvenirs or gifts for friends or family so be sure to factor that in as well.
Trip cost: $4,520 + gifts
Does this number fit into your budget? If it’s too high, you can adjust the areas above by choosing a closer destination, a different time of year, a cheaper hotel, eat at less expensive restaurants, do fewer activities or buy fewer gifts.
3) Write Down All Costs
Even though you’ve come up with a rough budget, you need to stay on target. This is especially hard while traveling as we are in spending mode.
Another drink from the bar? Of course!
It’s raining out side, let’s order room service!
Skydiving was great, lets go bungee jumping today!
By writing down all your expenditures for each day you force yourself to acknowledge that you have parted ways with many of your hard earned dollars. Remember to write down all expenses even if they are a $5 magazine and a $3 bottle of water. 5 $20 purchases don’t seem as big as 1 $100 purchase. By keeping a daily tally you can easily figure out how you are tracking to your budget (tip 2) and overall plan (tip 1).
4) Fund Your Trip With Cash
While this might not always be possible, try and fund your trip with cash that has already been saved. A vacation is supposed to allow you to get away and unwind. This may be more challenging if you are worried about how you will pay for it. If you are going to travel outside of the country, vacations are not cheap and can put you into debt quickly. As we saw above, a 1 week trip to Europe could cost $4,500.
If you are using credit to fund your trip, be sure to have a plan in place to pay the balance down quickly. While it is best to use cash, if you are using credit be sure to pay for the trip using a product (line of credit, credit card) with the lowest interest rate possible. It would be a shame to view a recent trip negatively due to an increased debt load.
If you put these 4 tips together you’ve got the foundation for building a great vacation.