When planning a trip, airfare, accommodation, travel insurance, and other expenses can add up quickly. Poor budgeting can lead to overspending, resulting in huge credit card debt and stress when you return home. 

Strategic planning and savvy budgeting skills can ensure your trip is fully funded and within your budget limit, but how do you budget for your next vacation without going into debt? 

In this article, you’ll learn how to set a realistic budget based on your travel expenses and your goals and needs. We’ll also give you some tips for budgeting and saving money when you’re traveling.

How much you allocate to your travel budget depends on your current financial situation, the length of your trip, and the activities you plan to do while away. There are various frameworks for budgeting, such as the 50/30/20 rule, that you can use to help structure your budget.

Under the 50/30/20 rule, 50% of your income should cover essential expenses (e.g., rent, food, transportation costs), 30% should cover discretionary spending (e.g., entertainment, restaurants, travel), and 20% should cover emergencies and/or future investments. You can adjust this guideline based on your financial situation and trip specifics.

About a quarter of Americans save 5% to 10% of their monthly income for travel. That means if you make $4,000 a month, you might save anywhere from $200 to $400 monthly toward your trip budget. Online budgeting tools like Mint can help you estimate your total trip costs.

Here are a few things to consider when planning your travel budget:

Define your priorities

When creating a travel budget, identify what you are more willing to spend on vs. what you are willing to save on. Think about the activities and experiences that make a trip meaningful for you. 

For example, if you’re an avid foodie, do you want to splurge on a few gourmet meals during your stay? Or will you be content with snacking on street food? 

The same goes for accommodations. If you’re a budget traveler, you might want to stay in a cheaper hostel or Airbnb to save on accommodations. But if you’re looking for a luxurious experience, you may decide to splurge on a five-star hotel or cruise.

Research your destination 

Before committing to a destination, you’ll need to do some research. Find out what activities are available in the area and the cost range for local transportation, hotel rooms, meals, attractions, and activities. 

Research the weather conditions for the time of year you’ll be there so you can plan for the appropriate clothing. Knowing what to expect will help you stay within your budget while avoiding costly surprises.

Pick the time of year

Travel seasons fall under peak, shoulder, and off-peak. Peak seasons are the busiest and most expensive time to travel, usually during a major holiday or school vacation when the weather is at its best. The increased demand leads to higher airfare, hotels, and attractions prices. 

Shoulder seasons are just before or after peak season, usually around spring and autumn, when there is less demand and prices are typically lower. Off-peak is the least expensive time to travel, usually during winter months. 

Peak seasons are best if you want to experience the full tourist experience, while shoulder and off-peak seasons are better if you’re on a budget and want the best value for your money. Research which travel season is best for your destination and plan accordingly.

Travel planning involves more than just booking a flight and hotel room. You’ll also need to consider visa fees, transportation costs, travel insurance, vaccinations, and miscellaneous expenses. Follow these steps when establishing a travel budget for your dream trip:

1. Travel

Travel costs account for the largest portion of your overall budget. They include plane tickets, train/bus tickets, rental cars, and gas. Your transportation choice will depend on your destination, budget, and timeframe. 

For instance, if you’re planning a long-distance trip, you may opt for a flight, but public transportation is more cost-effective for a short weekend getaway. It helps to compare prices for different airlines and transportation services to get the best deal.

2. Accommodations

Your accommodations will also be a significant part of your budget. Prices vary widely depending on your destination, the type of accommodation you choose, and the time of year. Hostels, Airbnbs, and hotels have different price ranges depending on the amenities they offer. 

Budget-friendly options typically offer shared rooms and basic amenities, while more luxurious accommodations include extra features like spas, pools, gyms, and private suites. Assess your options based on what you’re willing to spend.

3. Transportation

You must also account for transportation costs at the destination, such as taxi rides, bus tickets, and rental cars. Public transportation is economical if traveling within the same city or region. If you’re traveling to multiple places, a rental car may be your best bet. 

Research gas prices and rental fees in advance and factor them into your vacation budget. You may also need to purchase a travel pass or tourist ticket if you’re visiting multiple attractions.

4. Food

Think of what food types you’ll eat while on vacation, and research how much it will cost. Consider the number of days you plan to travel and the number of meals you’ll need. Dining out can be expensive, so consider budget-friendly options such as street food stands and fast-food restaurants. 

You can also cook your meals if you’re staying in an Airbnb or vacation rental. Plan ahead and shop for groceries at local markets to save money. Meal-sharing apps such as EatWith and WithLocals can also be a great way to sample local cuisine for less.

5. Activities

What fun would a trip be without activities? Activities such as sightseeing, water sports, concerts, museums, and theme parks make your travel experiences memorable and exciting. Research the attractions you plan to visit, look for discounts and coupons, and book tickets in advance to save money. 

Many cities and towns offer discounted tourist passes for multiple attractions, so check if they’re available at your destination. You can also take advantage of free activities, such as walking tours, public parks and beaches, and outdoor concerts, to stretch your budget.

6. Souvenirs

Souvenirs are a great way to remember your travels and bring home something special for yourself, your friends, and your family. But they, too, require proper budgeting as some souvenirs can be expensive. 

Research local markets, street vendors, and shops to find souvenirs that match your budget. Antique stores, discount outlets, and thrift stores can also be great sources for bargain finds. Avoid tourist traps and impulse buying so you don’t overspend.

7. Foreign exchange fees

Traveling abroad comes with foreign exchange fees that vary depending on the country you’re visiting. Check with your bank to learn about their exchange rates and fees, and compare them with those of foreign exchange services to maximize your savings. 

Allocate a reasonable amount of money for exchange fees, and be mindful when spending in foreign currency to avoid overspending. A debit card with no foreign transaction fees can also come in handy.

Savvy budgeting can help you maximize your trip funds and enjoy a memorable vacation without breaking the bank. Use these travel tips when budgeting for your trip:

Use a savings platform like Accrue 

Let’s face it, saving money for a trip isn’t always easy, especially when you have a daily budget to meet. 

Accrue Savings makes saving money for your next trip easy and stress-free. The platform helps you set a savings goal, make weekly or monthly deposits, track your progress, and make your travel purchase when you’re ready. 

No need for a high-interest loan or buy-now, pay-later service that can put you in debt. With Accrue Savings, you set up automatic transfers from your checking account to your savings account and watch your savings grow. 

Avoid peak seasons

Peak travel seasons, such as summer and holidays, are the most expensive times to travel because the high demand for flights and accommodation result in inflated prices. 

Consider traveling during the low season, when everything is cheaper and less crowded. You’ll get better deals on flights, hotels, and car rental services.

Look for credit cards with travel rewards

Credit cards with travel rewards such as airline miles, hotel points, and rental car discounts can help you save money on your next big trip. They help offset travel costs and can also offer additional perks such as free checked bags, priority boarding, and complimentary upgrades. 

Compare different cards, read the terms and conditions, and understand the associated fees before applying. Be responsible with the card to avoid accumulating debt.

Plan bookings and reservations ahead of time

Waiting until the last minute can be costly. 

Book flights and accommodation far enough in advance to take advantage of early bird discounts. Many hotels, resorts, and airlines offer discounts for early bookings as they like to know their occupancy rate in advance. 

You can use online comparison tools like Kayak, Skyscanner, and Expedia to find cheap flights, hotels, and car rentals.

Be prepared for travel emergencies

Travel emergencies can throw your entire budget off balance. Ensure you have sufficient funds in the event of a medical emergency, flight cancellation, lost luggage, unplanned hotel stay, or other unforeseen circumstances. Appropriate travel insurance can also help protect you from financial losses and offer peace of mind while on vacation.

Budget for your next trip with Accrue Savings

Proper budgeting is the key to a stress-free, unforgettable vacation. Knowing when and how to spend money makes the difference between an exciting and memorable experience and a financial disaster. 

Accrue Savings eliminates the guesswork and lets you easily save for your next big trip without compromising your daily budget. You also earn money to help finance your travels. 

Set up an account today and see how our travel partners like CheapOair can help you with amazing deals on your next trip.