Create A Vacation Budget That You Won’t Blow

Vacation budget

Sometimes it feels like vacation is a luxury you can’t afford—not enough time, not enough money. But committing to taking time off is actually good for you and your productivity. So carve out space in your annual and monthly budget to save for a little getaway.

You’ll come back refreshed and ready to step into your future earning potential (to bankroll even more vacations!). That being said, in this article, we'll be going over just how you can create a vacation budget that you won't blow!

Create your vacation budget

Your vacation doesn’t have to be luxurious or far away. But even a simple staycation costs money, so be sure to set aside a budget for any type of vacation you plan. Your first step should be to decide the maximum amount you’re willing to spend from start to finish.

Determine your destination to determine your budget

From there, you can work backward. The two biggest factors besides that upper-limit amount are the destination and the means of transportation. Urban adventures are generally more expensive than rural ones and Scandinavia will cost more than Southeast Asia. When it comes to transportation, driving isn’t always cheaper than flying. Factor in gas money, overnight stops, and the amount of time you have.

Factor in your vacation extras

Next, you need to consider all the vacation “extras” that you don’t pay for in everyday life. Will you need house or pet sitting? How much will it cost to get around—a car rental, public transportation, parking, travel between multiple destinations, visas to enter different countries?

While you have to eat at home too, you’ll likely be dining out at restaurants more often while you’re on the road. This comes with additional tips, drinks, and special snacks during the day. Factor in all the activities that’ll keep you entertained during your trip, like entrance fees to attractions, tickets to shows, and expenses at festivals. Even make a budget line for gifts and souvenirs.

If you’re going to the effort of organizing a great trip, you want to be able to enjoy every minute of it.

Create a vacation savings timeline

Once you know how much you’re willing to spend (and therefore how much you need to save), make yourself a timeline. If you need to save $2,000 for a trip to L.A. next spring, set a monthly goal to get you there. For a little boost in self-control, you might even want to open a dedicated savings account for your vacation fund.

You could set up automatic deposits into that account so it never gets the chance to burn a hole in your proverbial pocket. Having a budget calendar is also a really good idea!

Be mindful of currency exchange fees

Once you’re on vacation, stay on budget. Consider paying in cash so you don’t overspend. Depending on where you travel, local cash might be your only option anyway. If you’re going to exchange currency, look up where you’ll get the best rates. At the airport is generally the worst place to exchange money, so only do the bare minimum if you need cash for transportation to your hotel.

You might be able to bring some US dollars to exchange at your hotel or a local bank once you land. You can sometimes get foreign currency at US banks before you leave. But often the easiest and least expensive way to get cash is to use local ATMs. Just be sure to check your surroundings for safety, especially if you’re not familiar with the area.

Be mindful if using credit to pay for your vacation

Cash can be cumbersome, so another option is to rack up credit card rewards for your next trip by paying via credit card. Just be sure to pay off the entire balance right away. There’s no point in taking on debt and interest payments in exchange for credit card rewards. If you’re traveling abroad, put a travel notification on your card so that they don’t freeze your account. Also, look into whether your card applies fees for spending overseas.

No matter how you pay, track your spending every night of your trip. This will give you peace of mind if you’re on budget or serve as a gut check if you’re running over. Then you can course-correct over the following days, deciding where to spend a little more or less.

Decide what you can afford to splurge on

There’s no magic formula for how to spend your vacation budget. Decide what’s important to you. Is it food? Make sure you budget for plenty of fancy (aka expensive) meals. If it’s amenities, allocate a large chunk for lodging. If it’s activities, factor in admissions and transportation across the city or region.

There needs to be some give and take though. Once you have your splurge areas, figure out where you can save. Airbnb or other rental spaces are a great way to cut down on costs. If you rent a place with a kitchen, you can eat breakfasts in or pack picnic lunches. Rent camping gear if you don’t think you’ll be regular campers. Buy specialty sports or photo equipment secondhand if you’re not sure how to use them or if you’ll need them.

This is your vacation, so you can make it exactly how you want it, as long as it’s within that max budget you created from the get-go.

In closing: Hit the road!

Planning your vacation budget now will make your actual time away so much more enjoyable. Plus, when it’s back-to-reality after your trip, you’ll feel good knowing that your annual budget isn’t blown and you have enough to cover all your necessities and other financial goals. Vacation should relieve stress, not cause it. A simple, but thorough vacation budget does just that. Bon voyage!

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