One of the most difficult parts of trip planning is figuring out how much you want -- and can afford -- to spend on your vacation. Allocating part of your budget for vacation should be one of the first things you do when beginning to stitch together the perfect trip. Because everyone's financial situation is relative, no definitive guideline can be followed. However, there are a few helpful tips and planning exercises that can help you decide how to fill in some basic travel budget blanks -- after you've already accounted for the necessities.
What Are Your Necessary Expenses?
- The first step in allocating money to a travel fund is to figure out how much money you need in other areas. Expenses like your rent or mortgage, utility bills, debts -- credit cards, school or others -- and loans, insurance, food, clothing and anything else that you absolutely must pay every week, month, quarter or year need to be included into the equation. If you are unsure of some of the payments or costs, always err on the side of overestimation. Some people suggest following a 50/20/30 rule breakdown -- which allots 70 percent of expenses to housing, transportation, utilities, groceries and financial obligations combined.
Put Aside Some Money For Emergencies
- Even if you overestimate your necessary expenses, have good insurance or live on the side of good luck, you should always allocate a percentage of money to your savings. You never know when you will want or need to use this money and having it on hand can literally be a lifesaver. You can even use some of this money to borrow against yourself to go traveling if an unexpected travel expense arises or you just don't have enough right away for your dream trip. But, that being said: Save, use and plan for this money wisely.
- What Are You Willing to Sacrifice?
- Once you've got all your expenses and emergency money accounted for, you can start to work out a budget for your vacation. With the remaining money in your budget, make a loose budget of what "extra" expenses you want per month, including going out, dining out, concerts, shopping, manicures, haircuts, exercise and so on. This is usually where compromise comes in. Depending on the type of vacation you want -- the location, duration and level of luxury -- you may have to forgo some of your luxury expenses in the meantime as the money for both of these things is coming from the same place. Trade out money spent on superfluous activities for extra room in your vacation budget.
So What Kind of Vacation Do You Want?
- Now that you've got a ballpark number on how much you can save towards a vacation per week, month or year, you need to decide what type of vacation you want. Budget out the cost of the vacation as best you can -- including transportation, accommodation, meals, tours, souvenirs, drinks, entertainment, insurance, pre-trip costs and factor in a little for inflation. Don't forget to keep in mind any currency differences -- a trip to London is a lot more expensive than a trip to Peru. Figure out how long it will take you to save up based on your budget, and make adjustments where you are willing and able. In the meantime, it won't hurt to search through deals or find other ways to stretch your allocated vacation budget as far as possible.
