As people who travel often, we understand the need to save money to have the best experiences during our time away. Today I’m going to share with you how we set aside a travel budget so we can allocate money towards travel expenses and not have to sweat a massive credit card bill when we return home!
Who Should Create a Travel Budget?
For anyone who is planning to travel, currently on the road, or about to take an adventure they will never forget.
If you’re in the trip planning phase, a trip budget will help you craft a more practical itinerary. If you’re still saving for your trip, a budget will guide you in setting achievable financial goals. And if you’re all set to hit the road, your budget will ensure you make smart spending decisions along the way.
Creating a travel budget isn’t complicated at all. But before you dive in…
Keep in mind that your travel budget is meant to be a guide, not a strict set of rules. You’ll be estimating costs based on what you know, and it’s okay if things don’t go exactly as planned. Don’t treat the budget as an unchangeable blueprint.
We all have different ways we spend money. For us, long trips are much more enjoyable if we fly in an elevated cabin. For others, they may not care about where they sit and opt for cheaper flights and spend travel costs elsewhere.
Enough preamble, let’s get started.
Steps to Budgeting for Travel Expenses
The biggest cost for more trips is going to always be transportation. Airfare is not cheap! I like to offset these expenses by using travel rewards, namely my American Airlines and Delta credit cards that help me earn points towards free or upgraded travel.
That helps me save money on upgrades and occasionally get some free flights.
The second biggest place we spend money is on accommodation costs. You have a few options when it comes to helping save money here. One, you could go to budget hotels versus expensive hotel stays, which can make a huge difference, often in the hundreds if not thousands of dollars, depending on the length of your trip.
We use the Marriott Bonvoy Credit Card and earn points towards stays there, and I really can’t imagine not using that to get upgrades, late checkouts, and even free breakfast.
Always book directly with a hotel versus external websites. Sure, you may find a better deal using an aggregator, but if something goes wrong, unless you have travel insurance, you may have a very hard time changing your accommodation. I’ve learned this the hard way.
Best Ways to Save Money on Travel
Let’s start with some very obvious ways that are fool proof and certain to save your hard earned money.
Shop in Local Markets
If you are in an AirBNB or other accommodation where you can cook your own meals, this is an obvious way to keep the travel budget on the lighter side. Going out to restaurants always adds up. Even if you aren’t in an AirBNB, buy your staples at local markets and when dining out, choose local restaurants versus well known chains.
Use Foreign Currency
Change in your currency for the foreign currency and get the best exchange rate by asking around. This always helps you save money on transactions as they often won’t reward you with the best exchange rate in foreign countries.
Create a Daily Budget
Daily expenses can be loose, but if you blow it out on fancy restaurant, try to take it easier and eat at local restaurants the following day. I’ve had multiple trips where I went out and did all the lavish things on the first few nights and really went over my spend on my credit card and was like “whoops.”
As long as you even out your budget, you can have days where you had money saved by doing free walking tours or using public transportation versus using a rental car, and enjoying local culture and local cuisine like street food versus blasting through your savings account to eat at the best restaurants in town every night.
(Although, the latter is really, really fun…..I’m a foodie and love the experiences.)
The same can be said for visiting national parks on your own versus using guided tours. Many countries push you to use a local guide, but with the wealth of information online, I see many travelers like ourselves do research online to find out where to go when in a new city and not overpay for a local guide. The trip will be more cost effective that way and for us, we stay organized and don’t have to depend on other people’s schedules or nuances.
Travel in the Off Season
We love shoulder season! Our ideal trip is always away from peak season. We save more money doing this, and if you plan ahead, shoulder season deals can be very rewarding.
If you have wiggle room with your dates and can afford to take off work and get flights in any shoulder season, prices will be in your favor. For example, our last trip to Cayman let our hotel stays get upgraded every night because the hotel wasn’t sold out as it wasn’t peak season.
Any destination you travel to will have a high and low season, so make sure you pay attention to when that is so you can schedule your vacation outside of the high season and secure the best price and not have to deal with all the tourism.
You’ll also see your flight prices much more affordable, allowing you to save money and spend it on on must see sights, an elevated accommodation, or wherever you prefer to spend the savings.
Use Loyalty Programs
As a full time traveler, loyalty programs are absolutely necessary to defray expenses. All of our expenses go on credit cards that are affiliated with either an airline, or Marriott Hotels.
If you don’t have enough money to take a trip that you didn’t plan for in advance, you can cash in points or miles and make it happen. This is the best way to budget for travel expenses that I can recommend and you’ll be spending points or miles instead of your savings.
Rental Cars Versus Uber
Sure, having rental cars can sometimes feel like a burden, but if you use a service like DiscoverCars rental you will save big money on your rental and be able to explore your destination so much more. We frequently use this when we travel to Costa Rica, and to be honest, I don’t know how people rely on any other transportation and get the most out of their trip.
With a rental car you can drive places that have free activities, versus paying another fee to go there, which again will decrease your spending in that manner. If you don’t set aside money for a rental vehicle, you may regret it as the cost of transportation can be quite alarming in some countries and as much as your airfare if you are going on longer journeys.
Example of How We Might Spend Money on a Trip
Here’s a hypothetical example of how we go about using a travel budget of $5,000 for a four day trip to Grand Cayman.
Our major travel expense on this trip will be lodging and hotel stays. This is currently at $599 a night plus tax for four nights. As you can see this is more than half the budget, so we have some decisions to make.
Should we use our Marriott points and defray these travel expenses?
If so, we can save that fee and spend more of our vacation getting local food, sight seeing, and pay for things there that maybe we didn’t plan on.
For this vacation, there are a few things that are going to be a fixed price:
Travel Insurance: $175.
For us, travel insurance is a must. We recommend Safety Wing.
Cash for Tips: $50
Vacation Souvenirs: $200 (we always find hot sauce, some local trinket, or something for our son if he’s not with us.)
Dinner at a “must visit” restaurant: $350
Airfare: $800
Day on a Boat: $995
With this budget already exceeding $4,000, we’re going to be confined to our beach chairs and using public transportation as our travel expenses are approaching our limit.
We’d like to enjoy this example trip a bit more, so for us, in order to do so, the smart move would be to use the rewards points and totally eliminate the cost of a hotel. If we do this, our travel budget allows us to do so much more and the budget means the costs of anything that comes up as we travel allows us to afford those prices, whether it be an excursion, food, or other costs.
In short, get your controlled variables sorted out before anything. Your flights, your hotel or other lodging, and perhaps that fancy dinner you saw on Google.
Once you define those costs, you can adjust your trip and decide that maybe saving money on lodging is the right move, or maybe making that airport connection helps the budget by a few hundred dollars.
All in all, prices will always fluctuate and things come up, so I find that always saving cash and putting it into a travel fund will defray many of these spending decisions. Personally, putting any dollar bills valued $10 or under into a jar at the end of every week goes a long way to helping me generate savings that I’d otherwise spend on garbage!
But that’s me, we all budget differently. As someone who loves food and values spending money on food, that’s an area I’ll never cut out of the expenses. The cost is offset by memories, in my opinion.
Tips for Travel Budgeting
Setting up a travel budget is easy when you have the fundamentals down, but everyone will face challenges as everyone has their own preferences and ways they like to do a trip. Here’s a few final tips on how to work on your expenses and pay for what you need but not leave any experiences on the table.
Your budget should be defined by what you want to get out of it, and then work out the cost and figure out which expenses are adjustable.
For me, I’ll never cut out spending money on good food! Those are expenses I just build in.
I can always modify a flight cost or accommodation as those prices can really fluctuate depending on how fancy you want to experience those things. For me, the flights are probably the one I can modify the most if it’s a short voyage.
Food however, is a non starter! How would I update our restaurant reviews section without spending time at the best venues sampling International food? I always plan in advance and know that I will pay a lot for food but again, that’s just what gets me excited!
If you’re budgeting for an exciting trip to San Jose, Costa Rica, don’t miss our list of the Best Gay Bars in San Jose, Costa Rica to plan your nightlife activities.
Summary
I hope this guide and the tips provided helps you with your expenses. Remember to always leave a little room for unplanned expenses. You never know when you something will shake up your trip. A flight could get cancelled and we all know that nothing is cheap at airports!
About Tim Schmidt
Tim Schmidt is a 20+ year Entrepreneur and Digital Marketer. A Fort Lauderdale-based "Digital Nomad," he enjoys traveling as much as possible with family and friends. AllWorld is his escape to document all of his adventures, including being a hardcore "foodie." He has property in Costa Rica and visits several times each year and is happy to offer his expert advice for planning your trip.
