Finances and travel go hand in hand- and they should. We should make sure we can actually afford the trip we want to take. We should be spending our money smartly to make sure it stretches and we get full value. We should be doing the research to ensure we allocate our money to the right places and stay within our means. Not sure how to do this? I can help you with that in this guide on how to create a travel budget.
For those that don’t know, on top of being a travel writer and blogger, I’m also a bit of a money nerd. I’m obsessed with saving and strategizing how to make my money last longer and take me further. Before I worked remotely, I was a budget-addict. I had a set amount of money and researched ahead of time what I thought it could get me. I then recorded everything I spent so I could monitor my spending habits and see where my money was going. Being smarter with my money allowed me to travel more.
Now, I can afford to be more flexible as I work remotely and have money coming in as I travel. However, I still spend a lot of time researching costs so I know how much I can expect to spend, and I recommend you do the same.
So, with that in mind let’s get started on how to create a travel budget.
How to Break Down Your Travel Budget
To create an easy travel budget your best bet is to divide the budget into different categories based on the areas in which you are going to spend. Obviously, you can’t guess at everything you will buy and spend money on. However, there are several main categories and things that you know you need to purchase or book ahead of time. These are also typically the biggest chunks of your travel budget allowing you to have a good idea about how much you actually need to save for the trip you want.
Travel Budget: Travel Costs
The first thing you want to think of about are the physical travel costs. How much will it cost to get to the destination? Are you staying in one place? Or moving around a lot? What about local transportation once you arrive?
To get an idea for these costs, I recommend:
- Using a website like Skyscanner to compare flight prices
- Checking the calendar pricing for train/bus routes
- Looking into cruise prices
- Checking local websites for information on public transit (is there a multi-day pass?)
- Transportation to/from the airport (can you take the bus? Or do you need a taxi?)
- Car rental if applicable
Keep in mind, prices change all the time. Especially for things like flights, trains, and cruises. Don’t look at flight prices to Europe for 6 months from now, but plan to book only 1 month before. The prices are going to go up. Ideally, big travel costs will be booked as soon as possible to get the best rates.
Travel Budget: What About Accommodation?
One of your biggest expenses is going to be accommodation. It doesn’t matter if you plan on staying in hostels, 5 star hotels, or Airbnb rentals. This is going to be a big part of your budget so you need to have an idea of how much it will cost. Again, prices fluctuate and, typically speaking, you can get a better deal if you book early (and stay longer).
The good thing is that accommodation booking can often be a lot more flexible than booking things like flights. Most websites have a cancellation policy that will allow you a full refund if you cancel before a certain time. I love booking.com for this reason- most of their properties have a generous cancellation window and many let you pay on arrival.
- Browse different websites to compare prices
- Play with dates- can you save money if you stay for 5 nights instead of 4?
- Book early if you can cancel. It’s nice to have the price locked in if you find somewhere you like or a deal.
Travel Budget: Goals and Bucket-List Items
Next up you need to figure out what your ‘musts’ are. Why are you going to this destination? What is it that you want to see/do? I would argue that this is the most important part of your budget because if you go all the way to, say, Rome and even though you love history you don’t book a tour of the Colosseum because it’s too expensive then you are going to be really disappointed.
- Do some research for the destination you are visiting- what sounds like a must-see/do for you?
- Make a list of every experience you want to have. Don’t limit yourself – if it sounds interesting or is something you want to do, add it to your list.
- Price out tickets to the attractions or tours or events. I use and recommend GetYourGuide for booking a lot of tickets, day trips, and tours.
Personal story: That Colosseum example I used above? That happened to me. I visited Rome in 2013 and was worried about money so I skipped the Colosseum. I had HUGE regrets and while I’m lucky that I was able to go back again and see it another time, that isn’t always the case. Make sure you can afford to see and do everything you want. If cost is a concern, save for a little longer.
Travel Budget: Food and Drink Per Day
Another essential is food and drink because you will obviously need to do both. This can be pretty flexible depending on your travel style but again, it’s a necessity so you want to be aware of how much you can expect to spend. Obviously, you can’t plan for everything when it comes to food and drink. Maybe you’ll have a night out (or several). Maybe you’ll find some really cheap eats. It’s just a good idea to have a rough estimate about how much you should allocate each day for meals.
To do this, I like to check out the website Numbeo.com. It’s by no means perfect but they break down the cost of living in specific places and include estimates for restaurants and grocery stores and drinks. They even show you average McDonalds prices in each place- if that’s your thing.
One thing to keep in mind when creating a budget for this part of your itinerary is water. In some places, tap water is safe to drink but in many places it’s not and you will have to buy.
Travel Budget: Pre-Trip Costs
Pre-trip costs are something that people tend to forget about when worrying about how to create a travel budget. Which is a mistake, because there can be some pretty big necessary costs here.
Things to consider are:
- Visas- do you need one?
- Any required vaccinations
- Travel insurance- IS A MUST. Check out this article for more info and my recommendation.
- Gear or equipment; a new suitcase, a camera, travel converters for electronics etc.
- Essentials/Clothing: toiletries, did you need to buy a new swimsuit or hiking boots etc.
Travel Budget: Extra Spending
Even if you research and plan like crazy, your budget is never going to go exactly as planned. You need to allocate some wiggle room because anything can happen. I’ve missed flights and trains. I’ve arrived late and had to take a taxi because buses were done running for the night. Of course, there’s been lots of fun stuff too. Things like nights out, fancy dinners, or even souvenir shopping. I always recommend adding some extra money for spending as a safety net/cushion. What you choose to add will depend on where you are going and for how long you are travelling but it’s always better to allocate more and not spend it, then budget for too little and find yourself in trouble.
Example of a Travel Budget
Based on the categories above you can create your budget. You can use a spreadsheet or even a word document. I recently found my 2013 travel budget in old notes on my ipad. Whatever works for you.
I’ve shared an example below that you can use to create your own. If it’s just one destination- that’s easy. If it’s multiple destinations it may be easier to do one chart per country or even per city. Especially if you are travelling long-term as your plans may change and it’s easier to cut out a city/country rather than try to reevaluate your entire budget.
I also do recommend trying to keep track of your spending as much as possible. This is just for your own learning and for future budgeting. You can figure out where you tend to spend the most money and maybe look into how to cut down there or know you need to allocate more to that category next time. There are lots of apps out there to help you keep track of this. Take a look at Wally, Tripcoin, or TravelSpend.
Final Tips for How to Create a Travel Budget
Most of us create budgets to ensure that we can actually afford the trip which means your best bet is to start saving as early as possible. As I said above, it’s always good to have more money than not enough.
As someone who has done budget backpacking and high-end/luxury travel, the best advice I can give you is to wait until you can afford everything you want to do. This doesn’t mean you need a lot of money to travel and have a good time- you don’t. There is so much to see and do on a budget. But, if you always dreamed of going to Paris and going to the Moulin Rouge- save until you can afford it. If you want to go to Thailand and get scuba certified- save up so you can make that happen. Yes, we all want to travel as much as possible and as soon as possible. But we also want our travels to be everything they dreamed they would be so it’s worth waiting to ensure that happens.