How to Budget for Travel | A Short Guide

No matter if you focus on budget, mid-tier, or luxury travel, you should have a clear idea on where your money is going during your travels. When planning your budget, it’s important to keep your annual budget in mind, as well as general costs associated with the place you visit.

In this post I’ll show you how to budget for travel, so that you can keep money low on your list of worries as you vacation. As a bonus, I also provide a (free!) automated travel expense spreadsheet. Just read to the end to grab it!

Your Travel Budget and Your Annual Budget

Before we start making the budget, you need to consider how your travel budget fits into your annual budget. What I mean by this is, you should actually estimate your total travel costs for the whole year in advance of setting your budget for specific trips. Then, in the first few weeks of the year, really think through a few key trips that you’d like to take over the next 12 months. As you do this, remember keep the vacation hours provided by your employer part of your planning as well.

As an example, let’s say that you decide to set aside $8000 this year for travel. You know that you have a trip to Paris coming up in March, and plan to set aside around $3000 just for that trip. Some other places you are considering is a shorter trip to Jamaica in the summer, and a trip to Thailand towards the end of the year. You know that Thailand will cost more because of flights, so you put ~$3000 to that trip and the remaining $2000 for Jamaica.

These are all starting point estimates, however. You haven’t gotten into the details yet! But what these values give is the maximum cutoff for your travel expenses for the year.

Estimating Your Costs

The Cost That Comes Before the Budget

Can you guess what this is? If you said “flights” than you’d be right. The reason that I put this as coming before the budget is that the cost for flights can be a bit unpredictable. My goal when booking flights is to get the one with the lowest cost so that I can have more money to spend in the destination.

As I’ve mentioned in this post, one way I manage my flight costs is through booking with points. In addition to using points, use websites such as Skyscanner to find the best deals on flights.

In my post on how to plan a trip, I mentioned that you should book flights as soon as you know where you want to go. The sooner you do this, the sooner you can really start nailing out the remaining details of your budget.

In addition, here are some creative ways to save money while traveling so that you can keep your budget smaller while planning and maintain control while on the road.

RELATED: The 50/30/20 Budget Spreadsheet | Overview and Calculator

Estimating Loding Expenses

To estimate your lodging costs, I recommend browsing Booking.com or Agoda.com to get an idea of hotel costs in your price range. If you are looking to save more money, check out Airbnb too. Don’t forget to look into costs early though, this will help you get the best prices available.

Pro Tip: I recommend booking at least 1.5 months in advance, and earlier if traveling during a holiday or special event.

Estimating Transportation Expenses

You should determine how you plan to get around each day to build out your transportation budget. Will you take taxis every day? Do you plan to use public transportation? Is a rental car more of your style? Once you know the “how”, look at your list of planned activities to understand how much you need to be prepared to spend.

Example 1: Staying Downtown in a Major City

In this example, you estimate transportation costs to be low. You plan to ride the metro from point A to B, but may use taxis or ubers when it’s late out. You did your research and purchased a city pass to save money on public transportation costs. (The Roma Pass and the Lisboa Card offer deals like these). The passes and estimates for taxis are all plugged into your budget.

Example 2: Planning for City Excursions

In this example, you do stay in a city, but plan to take several self-guided excursions outside of the city. You decide to rent a car to get around easily. In your budget you’d include the cost of the rental as well as gas (this estimate should be based on the number of miles you need to drive).

Note, any transportation between cities or countries should be included in this bucket too.

Estimating Expenses for Food & Activities

Activity Costs

These costs will vary according to whether you are more of a do-it-yourself type of person or like to have pre-planned activities. I like to book tours that usually come with a fee, but there are options such as free walking tours or audio tours that you can do free of charge. Book what you can before you travel, but save some budget / flexibility to book when you arrive too.

For information on what tool I like to book by travel with, head to my post on GetYourGuide.

Food Costs

To get an understanding for how much meals cost, you should first check out restaurants listed in TripAdvisor. Most link to the restaurant pages, so you can check out menu prices. If you plan to eat any special meals, make sure you understand the prices associated with these meals. Use this information to set your average cost for meals in your budget.

Determining Your Daily Budget

I recommend waiting to identify your daily budget until after you’ve made all of your pre-trip purchases. This means purchasing all the flights, transportation, and activities first. After these expenses, you will have a bucket of money that you can use to estimate how much money to spend each day.

The Formula:

(Total Budget – Total Spent) / (Trip Days) = Daily Spend

Example:

Here is an example estimate based on the example trip to Paris in the first paragraph:

Total Budget = $3000

Total Spent Before Departure = $1250

Trip Duration = 9 Days

(3000 – 1250) / 9 = $194.44

Your daily budget is the place where you keep track of any miscellaneous expenses, such as shopping / souvenirs, money fees or even emergencies. It’s important to keep track of these expenses so that you can increase or cut back your spending as necessary on a day-to-day basis. This will be particularly helpful for those of us who like shopping ;). 

Also, you can always reduce the amount of money you plan to spend daily if you know you can do it. Word of caution here though, be realistic. Don’t make the budget so small that you take away from your enjoyment. 

The Travel Expense Spreadsheet

Now that you understand HOW to budget for travel, I’d like to introduce a tool that you can use to keep track of everything. This travel expense spreadsheet allows you to keep track of your total budget and all the expenses you use during your trip. It is automated, which means that all the calculations will be done for you! All you have to do is put in the numbers :).

This is not a complex tool, but simple and straightforward – anyone can use this with ease!

Perhaps best of all, this tool is in Google Sheets, which will allow you to keep track of your expenses on the go! The benefit of this is that when keeping track of your money daily, you less likely to overspend. Which means, more money for your next trip! 

FYI: If you are an excel user, don’t fret, you can also download to tool to Excel :).

If this tool sounds useful to you, see the form below to get your FREE download:

Note that specific instructions on how to use the tool are provided in the download.

RELATED: How to Plan a Trip in 12 Simple Steps

Summary | How to Budget for Travel

Now that you know how your travel budget fits in your annual budget, how to estimate your expenses, and how to determine your daily budget, you should now be a pro on setting your travel budget!

The knowledge of knowing exactly where you money goes can be quite freeing, and I’m happy that I’ve been able to share that with you here.

Please let me know if this was helpful for you in the comments below! If you have any questions, don’t hesitate to ask.

Related Posts:

• The 50/30/20 Budget Spreadsheet | Overview & Calculator
• How to Plan a Trip in 12 Simple Steps

#travelwandergrow