At a Glance
It’s estimated that international and domestic travel contributes more than $1 trillion to the GDP, with an estimated 2.2 billion Americans traveling domestically and nearly 80 million internationally. Leisure-based travel accounts for nearly 74% of all tourism in America, and the number of travelers is expected to increase over the coming years.
There’s also research linking travel to helping people feel calmer, improving mental power, increasing creativity, and lowering stress. There are many benefits for both your physical and mental health.
These astounding stats help prove that travel is an important part of life, but unfortunately, traveling can also be expensive. The good news is there are ways you can budget for your trip to help make it more friendly on your wallet.
Read on to learn more about:
How much money do you need for a trip?
How much you need for a trip depends on several factors such as:
- Your destination: This is likely the main determinant for your budget. For example, traveling within the U.S., around Europe, to Australia, or through Asia will all have significantly different costs. Also consider the exchange rates in these countries, where the U.S. dollar may be valued.
- How you’re traveling: Traveling by car, public transportation, boat, or plane also have very different costs. Plane tickets can be thousands of dollars while gas for a rental car may only be a couple hundred.
- Your travel style: Are you planning on backpacking through Europe? Or flying to different countries? Will you be staying in hostels and couch surfing or higher-end hotels? What types of activities do you want to do? For example, relaxing on a beach will cost nothing, but scuba diving lessons could cost hundreds or thousands of dollars.
Planning a trip as far in advance as possible will help you better understand what type of trip you’ll be taking, how you expect to spend your time, and how much that may cost.
Big expenses you need to budget for before traveling
After thinking about where you’re going, how you’re traveling, and the travel style you want to embrace, start considering the big expenses you’ll need to budget for and how much they will cost. Things you must budget for will also depend on your destination and type of vacation, but a few big ones are airfare, regional transportation, lodging, and food and drink.
These days, many people opt out of airplanes in favor of more personal and cheaper forms of travel. But if your destination requires a flight, or if you prefer to travel by plane, you’ll want to budget for airfare. Depending on where you’re flying, airfare can be a couple of hundred dollars or thousands.
If you have access to multiple airports, compare flights going in and out of each. If not, consider booking a cheaper ticket to a larger hub which may then offer cheaper flights. Airline prices typically increase the closer you get to your departure date but aren’t as predictable as they used to be. Look for deals and grab them as soon as you find one.
2. Regional transportation
Once you get to your destination, how will you get around? Rent a car? Use an Uber or taxi? Try public transportation, like a bus or subway? Or in some cases, you may plan on walking everywhere. Do some research on what your desired transportation costs at your destination and build in some cushion in case things change when you get there.
This is one of the heavier expenses, especially when calculating taxes and fees, but it’s also one of the most predictable because you’ll likely be booking lodging ahead of time so you can take time to research your options. How much you need to save depends on where you’re going to stay. For example, hostels are significantly cheaper per night than hotels.
Be sure to check out multiple sources before booking a hotel to find the best rate. Don’t be afraid to consider shared lodging, like a hostel or a room in a local Airbnb, as these can save you significant cash. Also try to take advantage of any deals you get through membership programs like AAA or travel credit cards.
4. Food and drink
Again, another expense that depends on a lot of factors such as your destination, how you like to eat, what you like to eat, and how much you expect to tip. An all-inclusive resort that you pay for up front is much easier to budget for than a two-week trip through Europe, where you don’t know where you’ll be eating each meal.
Try to research meal prices or join vacation groups online for travelers who have been in the past and ask what you can expect. If you can, do your own cooking where you’re staying or choose accommodations that include meals. Remember, breakfast will likely be cheaper than dinner, and drink prices vary based on what you’re drinking.
Other expenses to be considered
The above aren’t the only expenses you should consider when budgeting for your trip, though they are the biggest and most common. Here are a few additional expenses you may also encounter and need to plan for:
1. Vehicle rentals
In the U.S., the average weekly rental car prices hit nearly $700, though you may be able to get cheaper depending on the type of vehicle you’re renting. However, keep in mind additional expenses you may face such as additional driver fees or rental car insurance.
To save on insurance, check if your existing car insurance extends to rental cars. Also check whether your credit card offers rental car insurance, or discounts for using the credit card to book.
2. Debit card holds
Many hotels and car rental companies put a hold on your credit card when you arrive. While you get this back after your stay (as long as they don’t charge you any damage fees), you won’t have access to those funds until the hold drops if you book using a debit card. If you can, book these things with a credit card. But you should also include this expense when budgeting ahead of time to avoid any issues.
3. Entertainment costs
Consider the different entertainment options at your destination. Museums? Discos? Casinos? Zoos? Famous landmarks or attractions? Excursions? Depending on what you want to do on your trip, you may need a larger entertainment budget.
The good news is that many of these things can be planned, and costs can often be found online. Additionally, some major cities offer tourist cards, which bundle tickets to several attractions onto a card valid for the length of your visit at a cheaper price than purchasing individual tickets.
4. Cell phone connectivity
Not all global locations are covered by cell phone plans like Verizon, though some, like Google Fi and T-Mobile, cover most locations for free with your plan.
Some options include:
- Purchasing a local prepaid SIM card.
- Leave your phone on airplane mode and only use it when connected to Wi-Fi.
- Switch plans to one that has coverage in your location (if you’ll be traveling for a longer period).
5. Emergency costs
While we obviously never want to face an emergency while on a vacation or traveling, it’s important to be prepared just in case. Or this could include travel insurance that protects you in case of unexpected delays, cancellations, or medical costs in covered situations. If you don’t have travel insurance, plan to have some cash to cover those situations should you need to.
Tips to stick to your travel budget
Traveling is exciting and it is easy to get overwhelmed with the planning process, or even once you get to your destination. However, there are things you can do to stick to your travel budget to ensure you don’t overspend and get yourself into a financial mess that will follow you home.
1. Plan your budget in advance
You’ll know many types of expenses before leaving, such as those listed above. And even if you don’t know exactly how much you’ll be spending, you’ll generally know what you’ll need to budget for.
- Start with the expenses so that you know exactly how much you’ll be spending or have a pretty close estimate. This can include airfare, vehicle rental costs, or lodging.
- Next, think about what you’ll do once you get to your destination, such as excursions, places you want to visit, or other entertainment. Research these online to see if you can get an estimate for how much they cost.
- Dining expenses should be next. Again, think about how much you’ll be eating out vs. cooking in, and the types of dining experiences you want to have. Try to research how much food and drink costs at your destination.
Finally, consider the other additional expenses above. You may not know exactly how much you need, but by planning your budget in advance, you’ll be able to identify what you’ll be spending on. This can:
- Ensure you think about all the expenses you may encounter so you’re not surprised by any unexpected big costs.
- Give you more opportunity to find savings or cheaper alternatives.
- Create a plan for spending, which ultimately will help you stick to your budget.
2. Don’t forget visa and insurance costs
If you’re traveling for an extended period, or to certain countries, you may need a visa. The application for most common nonimmigrant visa types is $160, and you’ll likely have to apply for this months in advance, so this may be one of your first expenses.
Additionally, as mentioned above, travel insurance is a good idea when taking a trip. There are different types of travel insurance with varying coverage, each with different costs. However, the average cost of travel insurance is between 4% to 10% of your trip cost.
3. Identify your priorities
It’s important to be flexible when traveling. While you should have some idea of an itinerary, allowing for splurges or unplanned activities helps make your trip less stressful. Planning will help ensure you don’t run out of money halfway through the trip or wrack up debt on your credit card. But traveling is about having fun and enjoying life and deciding your priorities in advance will help you determine how you want to spend your money.
For example, is it more important to eat out at a fancy restaurant or visit as many local museums as possible? Would you rather stay in an upscale hotel, or take an excursion through wine country? Do you want to be able to take home a lot of physical souvenirs, or memories and photos? Identifying your priorities will help ensure you don’t have any regrets, but also don’t get yourself in debt.
4. Start saving in advance
The sooner you can start saving for your trip, the better. Not only can this help ensure you have enough for your planned expenses, but also for those other fun or unexpected costs. It can also help ensure you aren’t stressing about your budget while you’re gone.
Start by analyzing your current income and spending. Determine if there are things you can cut out or cut back on and put those extra dollars in a separate account. Try for a high-interest savings account if possible.
You may also want to earn some additional income. Start a side-hustle, work extra shifts, or sell things in your home that you no longer use and put that income aside for your trip.
Start by deciding the type of vacation you want and where you want to go. Consider the cost to get there, such as airfare or vehicle rental. Then, think about the cost of lodging at your destination. If you’re road tripping, you’ll also want to include lodging costs along the way. Add in dining and food costs, as well as attraction and entertainment costs. This can help you calculate your travel expenses.
This depends on the type of vacation you have and the destination, though a rough estimate of between $200 – $500 per day can be a safe start. Other experts suggest a one-week vacation in the U.S. for one person is about $1,500, while a two-week European vacation for one is around $4,000. You’ll also want to factor in extra cash for things like tipping.
Many will agree travel is worth spending money on. Not only can you learn so much about other cultures and countries but traveling can put many things into perspective for your own life. It may draw you out of your comfort zone. Or it may serve as a time for relaxation when life gets hectic. Whether you’re visiting a beach or backpacking through mountains, travel is something you shouldn’t hesitate to spend money on – if you plan appropriately.