Travel Budgeting 101

So you decided you want to take a trip somewhere amazing. Congratulations!

If you’re looking to plan the entire thing yourself like I always do, the first thing you should always do is set a budget. This allows you to figure out how much you need to save up and it can really make or break your experience.

The process I am about to share is my personal method for budget formulation. I have used it for countless trips and it has always been successful for me. I have never gone anywhere without enough money. In fact, I usually spend exactly what I set for my budget, or sometimes even come home with a little extra leftover.

Everything will really depend on a wide variety of factors, including where you’re going, the time of year, how much you have to spend, what activities you want to do, and whether you’re trying to be frugal or going all out. Also, this is all based on estimates so your actual expenses may be less or more.

To simplify what can become quite complicated, I am dedicating this post solely to budgeting. I will release several other posts to accompany this, such as booking flights, picking hotels, and ways to save money. This post is just to show you how I set a budget, what categories you need to consider, and what to research. Follow these steps to get an idea of how much your ideal trip will cost, and then there are ways to trim it down if need be, which will be listed at the end.

1) Pick a timeframe. Gathering this info first allows you to gage what time of year you should go. Google “best time of year to visit ___”. Thankfully, there are a plethora of sites that have everything outlined for you on any destination. You need to find out what the peak season is, since prices rise significantly then for most cities and you may want to avoid those months. You also want to consider weather, since it would be a waste of money to visit certain places during monsoon season when you may not be able to do much. In addition, certain events or holidays could drive costs up. If you’re going for a specific event, such as Essence Festival in New Orleans, you can pretty much expect costs to be significantly higher than normal due to everyone else and their mother going at the same time.

2) Set a tentative itinerary. A lot of people may argue that this part comes later, but I strongly believe it’s necessary to do this at the very beginning of your planning. That’s because it allows you to figure out the number of days/nights you’ll need for your trip, which directly determines your costs. Most places you go have certain “can’t miss” attractions or tourist things to do, and if you’re like me you’re all about getting in as much sightseeing as you can. So this will include activities, excursions, tours, shows, museums, and general exploration.

Google “top things to do in ___” and pick your must-see items, then others that you may or may not be able to squeeze in. Everyone sets their own pace for their trips, meaning how much you cram in or whether you prefer a leisurely pace to just “go with the flow”. If you’re going somewhere like Paris where there are endless attractions and museums to explore, it’s hard to fit everything in both time-wise and financially. So read as much as you can about each activity/attraction, as some will take a few hours and others will be all day ordeals.

As you’re looking up activities, jot down a tentative itinerary of items for each day and night, and also be sure to jot down price estimates for each activity while you’re at it. Many, such as parks or museums, may be free or have reduced prices on some days. Other activities such as sky-diving, a live show, or guided tour could cost you $100+. These items will most likely change or get moved around but it gives you a good idea to start with.

Be sure to also factor in travel time (generally you won’t be able to do too much the day you arrive and the day you depart, especially with jet lag), as well as some downtime so you don’t overdo it and exhaust yourself, and so you have some flexibility. You may want to plan an entire day just to lounge by the pool and enjoy your hotel’s amenities, or a free day to just roam around and shop.

Here is an example for visiting Honolulu:

Day 1:         Arrive 12PM, Check in, Hit Waikiki beach

Night 1:      Dinner @ hotel

Day 2:         Historic tour ($60)

Night 2:      Sunset Cruise ($50, dinner not included), Dinner

Day 3:         Sunrise hike (free), Museum ($5), Pool (free)

Night 3:      Live show ($25, includes dinner)

Day 4:         Dolphin excursion ($90)

Night 4:     Luau ($60, includes dinner)

Day 5:         Surf Lesson ($80)

Night 5:      Dinner

Day 6:         Shopping in town, Depart 4PM

This determined that I’ll need 6 days and 5 nights. Also, I’ll only need dinner for 3 nights, since 2 activities include dinner.

           3) Do a preliminary check on flights and hotels, since these will likely be the biggest expenses. Flights vary substantially, so I will be doing an entire post to go over that later. But you’ll need to monitor them for a while to get the best deal. Hotel rates on the other hand usually stay pretty consistent, so just get a general idea of the range that works for you (i.e. $100-130/night for 3 star accommodations). I like using websites like Kayak who will shop around for you and get you the best rates, and then Trip Advisor to see which hotels are rated the best (I will do another post on selecting hotels later too). Be sure to consider taxes and fees that will also apply, since most people miss this. Finalize some estimates for both categories (e.g. $850 for flight, and $200/night for hotel).

       4) Check out food options. Look online to see how much the average meal costs. Websites and guidebooks out there do a great job of letting you know the price range for a meal in any given city (e.g. $ = $5-15, $$ = $16-25, $$$ = $26-45, $$$$ = $46+). Generally, breakfast and lunch can be pretty cheap or may even be included at your hotel. But dinner will make up the majority of your food budget, unless it’s included in some of your evening activities (like the two meals in my step 3 example). Some folks try to really save in this area, but if you’re a foodie like me, you’d rather skimp in other areas so you can splurge on some good meals and try the best local restaurants. There are some places I’ve been, like Costa Rica, where I could get a huge plate of food for $5. But in general, if I’m in Spain, I am willing to pay for good paella and sangria. That is a major part of the experience for me personally. Staying away from tourist traps is a good idea, since I’ve seen $30 burgers in Times Square just a block away from a much more delicious burger for $10. Finalize some estimates for your daily food budget (e.g. $10/day for breakfast, $20/day for lunch, $30/day for dinner, total: $60/day).

      5) Check out ground transportation options. Look up average prices and compare fares for each method of transportation at your destination. This is harder to find than other categories you’ll research, but the info is definitely out there, especially in guidebooks. For most cities, trains and buses are the most efficient and cost-effective method for getting around. However, you can also research the cost of renting a car (which should include gas, parking at your hotel, and parking wherever you go) just to compare. Some places you go may not even have train systems to use so you’ll have no choice. But usually, public transportation saves you a ton of money, time, and hassle. In many cities you can even get a day or week pass for unlimited use, which I jump on whenever I can. Another option is taxis, which are easy but super expensive, so I only use them as a last resort. Finalize your estimate for daily transportation (typically $20-30 per day).

6) Check out airport transportation. Is the airport close to the city center or far away? In many cities I’ve been, such as London and Tokyo, it’s actually far away. Many people forget how much time and money this can involve, so be sure to consider the best way to get to and from the airport. It may cost you $40 a week to park at the airport in your home city, but if you can arrange for someone to drop you off, then it’s free. Once you arrive to your destination, you may be able to catch a free or reduced shuttle bus to your hotel, take the train, or may just be close enough to catch a quick taxi. In Tokyo, I was able to get a round-trip ticket on the Narita Express for about $33 round-trip and it took about an hour. So don’t forget to get an estimate for this expense.

      7) Decide how much you want to spend on souvenirs. This is another cost that could really set you back if you don’t plan for it. It’s really a personal preference. Some people like to shop for themselves and others, while others skip this completely. I used to buy souvenirs for everyone, and then I realized how little people actually appreciate them, and how most keychains and magnets get tossed. So now I don’t really buy for many, but there are a few items I seek because I like to bring them back as mementos for myself (magnets, picture frames). I typically budget $100-300 for souvenirs, depending on where I’m going and what items they’re known for.

      8) Decide how much to set for incidentals (optional). This is everything from souvenir photos, a daily latte, exchange rate conversion, ATM fees, etc. All of these things seem nominal, but they add up so I like to account for this and leave myself some cushion. And if I don't end up using it all, it can go towards a splurge meal, souvenirs, or I can just take it home with me. So I typically set about $20 a day in incidentals.

      9) Plug in your estimates into your categories. Here are my estimates for my example trip to Honolulu.

Flight: $850

Lodging: $200/night for 5 nights = $1000, plus $50 resort fee: $1050

Entertainment/Activities: $370

Food: $60/day for 6 days = $360, minus $60 for two dinners included: $300

Ground Transportation: $20/day for 6 days: $120

Airport Transportation: $40 for parking, free shuttle to hotel: $40

Incidentals: $20/day for 6 days: $120

Souvenirs: $200

Total: $3,050

Other things you may want to consider and put into your budget include:

-         Baggage fees

-         The cost of getting a passport if you don’t have one already

-         Visa or entrance/exit fees

-         Parking at hotel

-         The costs of buying things for your trip, such as travel sized toiletries, sunscreen, new outfits

Remember, the more research you do the more spot on your estimates will be, but when in doubt, round up. For me personally, it’s always better to overestimate and have a little extra than to feel restricted because I did not bring enough. When I travel, I really like to enjoy myself and see/do as much as I can, and budgeting has truly helped me make it possible. And the great thing is, the more you travel, the better you’ll get at doing this and creating really precise budgets that are close to, if not exactly, what you’ll actually spend. If you’re tight on cash, a budget allows you to set targets so you’ll know your limits, and to stay on track maybe you can skip on a $10 glass of wine or souvenir photo with your budget in mind. I learned the hard way whenever I tried to just wing it or said "all I'll need is $500" and ended up regretting it. So putting in this effort to plan and prepare a budget means I don’t have to worry about it later on when I’m actually on my trip and instead, I can truly enjoy my time!

If your budget total ends up being way out your league, there are many ways to reduce your costs that you may want to consider, such as:

-         Reduce the number of days/nights. If you cram more into less time, you may exhaust yourself but you’ll definitely save money. This is the best way to save.

-         Inviting other people to join you and split the cost of lodging. Sometimes you may even get group rates for activities. Solo travel is my favorite but it's more expensive.

-         Stay at a hostel. While this has a negative connotation for many, there are actually several high end options now at many destinations.

-         Specifically choose hotels that eliminate costs and come with freebies, such as ones with breakfast included or ones that provide transportation to/from the airport for free. Also, choosing a centrally located hotel where you can walk to most places helps to reduce ground transportation costs.

-         Plan trips to visit friends or family so you can stay with them for free. They're also a free tour guide that can show you around and possibly get you local rates or hook ups. 

-         When you arrive at your destination, go get some groceries so you can make sandwiches and have snacks instead of always eating out, which greatly cuts down on food costs.

-         Find out where there’s a swap meet or market to buy super cheap souvenirs.

-         Instead of buying tours, try to plan your own sight-seeing for free. Choose cheaper excursion, shop around, or try to get them using rewards programs for discounts. Always check for groupons at your destination.

-         Use airline points to redeem free flights (more on this in my upcoming airfare post!)

Ultimately, you can go as extravagant as you want or keep it simple in order to spend less. Either way, I advise you to never let money to be a deterrent. Even if you have to thug it out and sleep on someone’s couch, there is no pricetag for the incredible experience of seeing the world and exploring a new city/country. It's ALWAYS worth it! I urge you to use these budgeting techniques as a tool to plan, so you can save and make your dream trips happen one by one! Enjoy and good luck :)

XOXO ❤️