Vacation budgeting best practices
March 15, 2022• 4 min read
What we'll cover
Tips to not overspend while traveling
How to spend your money strategically on vacation
Why you should build cushion into your budget
You’re sipping a frozen cocktail on the beach. Or maybe you’re exploring quaint city streets. Whatever the destination, you’re on vacation! Whether it’s for business, pleasure or a little of both, travel can be expensive. But if you follow some basic budgeting best practices, you can indulge your wanderlust without stressing your wallet.
You’ve worked hard to save up for a trip. While it may be tempting to spend indiscriminately once you’re there, resist the urge. Instead, consider dividing your savings into needs and wants. For example, you need to pay for some type of lodging — whether it’s a hotel, vacation rental or otherwise. You’ll typically know the cost ahead of time, so it’s easy to allocate a portion of your budget. Once you get there, you also need to eat every day. This can get a little more complicated to map out but setting a daily limit or food budget for the trip can help guide your spending.
Other parts of your vacation may fall more into the wants category. For instance, do you really need souvenirs for everyone back home? Do you need to splurge on that fine dining restaurant? Assess your spending as you go and adjust as necessary. For example, if you stretched your budget, scale back on your last day (maybe try some lower-cost dining options like street food). Or you end up under budget, you can spend more on gifts before you head home (or put it toward your next trip!).
You also have a lot of control over the price of your trip, depending on when, where and how you travel. Consider scheduling your trip during the off-season for lower airfare and hotel prices. Or skip the flight altogether and take a road trip. It’s all about priorities and balance. If you have an action-packed itinerary and your hotel will just be a place to sleep between adventures, you could save by booking lower-priced accommodations. Then again, maybe a beachfront view is a must, but you’re happy to make some of your own meals to save money. Identify what matters most to without cutting back on your enjoyment.
Make an itinerary
To create a realistic vacation budget, it helps to map out your days and account for all associated expenses. You can decide how many meals you’ll need total, as well as which ones will be out at a restaurant vs. which ones you’ll prepare yourself. Look up the price of attraction and activity tickets and be sure to account for transportation.
Don’t forget about costs associated with being away from home, such as pet care . You don’t have to plan every moment but plotting out costs ahead of time can save you from any surprise costs and budget busters.
Build in a cushion
Remember it is vacation, so it’s unlikely you’ll be able to anticipate every dollar you’ll spend (spontaneity is the spice of life, after all). Instead, budget some cushion money above and beyond the costs you plan for. This extra cash can come in handy when you spot an item in a local boutique you just have to have, or you want to leave an extra tip for a great tour guide. Planning for those spontaneous moments can help minimize stress over extra expenses as they come up.
Pause spending at home
The good news is that while you’ll be spending on vacation, some expenses you’d normally incur might go on a hiatus. For example, you don’t need to budget for a week’s worth of groceries while you’re on a trip. Think about other areas where you may be able to benefit from pausing services, especially if you’ll be traveling for a longer time period. Consider skipping a month of your gym membership or suspending some of your streaming services. You could even sublet or host a vacation rental if you’ll be away for a few weeks. Finding small ways to save on your home expenses can boost your vacation budget and keep your finances on track while you travel.
Budget for your dream vacation
While travel may help you rest, recharge and broaden your horizons, unexpected costs can cause stress while you’re on vacation. With a little planning and strategy, you can get away from it all without your spending getting carried away.
Ready to plan your next trip? Smart savings tools, features of Ally Bank’s Online Savings Account , can help you save for your next travel adventure today.
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