Picture this. You are sitting back in your all inclusive hotel and relaxing in the sun when you notice an exclusive snorkeling excursion offered that will take you around the island, provide you with a romantic dinner, and show you a number of exclusive sights that normal tourists do not get to see.
Sounds perfect, doesn’t it?
The problem is that the opportunity is only going to be perfect if you planned to have enough money to make it happen.
And that isn’t always as simple as we thought.
The last thing you want after a big vacation is to feel like you missed out on something, have any regrets, or be dealing with credit crunching debt. This is especially true if you end up traveling somewhere in a group and all your friends can afford an excursion while you can’t.
For many, the days of traveling on a bare bones budget with barely enough to survive are over. Living off of food scraps, sleeping in seedy accommodations and skipping out on luxuries used to be the epitome of a good time.
Things certainly do change over time don’t they?
Thankfully, it is possible to have your cake and eat it to when it comes to budgeting and traveling for pleasure. If you plan ahead, search for bargains, and cut out some overpriced tourist luxuries, then there are ways to afford an excellent vacation on a reasonable budget.
All you need to realize is that budgets aren’t always as much of a downer as people think. Do it right and the rewards far outweigh the drawbacks.
So let’s get our travel budget done.
Not All Destinations are Equal
If we want to create a travel budget properly then the first thing we have to do is accept the fact that not all destinations are equal, or even affordable. One week in certain destinations in Europe can cost exponentially more than an entire month in a South American destination. The fact that most of South and Central America is more affordable makes planning a little bit easier, but there are still noticeable variables all around.
To budget properly for a vacation means to be prepared. While your dream may be to sit in a quaint coffee shop in Paris and watch the sunset, you need to ask yourself whether you would rather pay the same price for a cup of coffee in France as you could for an entire night’s stay in a Latin American hotel.
While traveling is all about personal preference and choice, you need to really think about the global financial situation. Back in the 1960’s Europe was easy to do and see on less than $5 USD a day. Now you would be lucky to find one, classy alcoholic beverage for less than $15. This price difference is especially glaring if you have a flair for luxury. You can settle down in a 3 or even 4 star hotel in places like India and Argentina for $50 a night. However, if you walked into a hotel in Madrid and slapped down a $50 bill you would be laughed out of town.
Thus, the best way to begin a budget is to figure out how much you can spend, and then compare what that money will get you in different places of the world. If your budget is $1,000 and it means you can only stay in a place like Norway for 2-3 days maximum is it really worth it?
Starting your Travel Budget like a True Financial Expert
Start off planning your budget by sitting down and figuring out the maximum amount of money that you would be ok with spending on your vacation. The good news here is that you can usually bump that figure up a bit because of all the money you are saving by not being at home. For example, food costs, utilities, your phone bill, and so on.
So if you decide that you have a maximum of $2,000 to spend on your vacation, then you begin by subtracting the price of airfare from your budget. If your flight costs $800 then you have $1,200 to spend while you are in the chosen destination. If you plan on spending two weeks away from home, then you now have just over $85 to spend per day including food and accommodations.
That is more than enough cash for some places, but far from enough in others. You may notice that some destinations you seemed “destined” to see just are not meant to be. Does this mean that you are forced to sit at home and do nothing again this winter?
The Dreamer’s Budget
This is the style of budget for people who simply want to make things happen. If you want it bad enough there are always ways to get it.
Sit down and look at your dream destination and try to calculate how long you will need to stay there. How long will it take to see everything you want to see and do everything you want to do? Next, figure out how much it is going to cost to see and do all of those things and stay in your destination for X amount of days.
All that is left to do is to convince yourself to spend that much money. If you simply cannot come up with the money, then try to lower your expectations for accommodations or plan the trip in the offseason. Even try cutting down on costs at home for a month or two beforehand. If you want that vacation bad enough, you will find a way to get it.
Putting Together your Travel Budget
Once you have decided where you are going, and have a good idea of how much you have to spend, it is time to get into the actual budgeting.
It may not be fun and it may not be easy, but it is the best way to make sure you make the most out of your dream getaway.
Here is how you can come up with the total cost of what you think your vacation is going to end up setting you back. (Or forward if you are a positive thinker)
1- Pre-Vacation Costs
These are the costs of everything that you will be purchasing before the vacation. This includes any visas you need to get, new clothes, sunscreen, a new camera, or anything you may be investing in to make the trip that much better.
2- Air Travel
Look online and come up with an approximate cost for airfare for the specific time of year you are traveling. Be sure to sign up with a site such as Yapta.com to ensure you get the best deals.
3- Miscellaneous Transportation
This part of the trip cost includes taxis, buses and other ways of getting around that you will be using for your trip. You can utilize guidebooks to give you a good idea of cost and the itinerary of the attractions you want to see will give you information on what transportation you will be using.
4- Accommodations and Meals
The best way to estimate the cost of your accommodations and food over the course of your vacation is to use the internet and up to date guidebooks. While it is pretty impossible to come up with exact figures, there is more than enough information out there to give you an excellent guesstimate.
Keep in mind that there may be fluctuation in pricing while you are there and since other tourists have been there. If you plan something such as $50 a night for accommodations for 2 weeks, be sure to add about 10-15 percent to keep you safe in case there have been changes. So if you calculated that 2 weeks for accommodations will be $700 be sure to $100 just to be safe.
The same goes for meals.
5- Extra Activities
If you do not plan ahead and budget for extra excursions and fun activities then they can destroy your budget. These experiences are things such as sailing, rafting, snorkeling, fishing, and so on. Chances are that these opportunities are going to be all around you and you won’t even know you can do them until you get there.
So once again to be on the safe side you should check guidebooks and the internet as well as call travel agents to see what sort of activities are abound in the area. These resources can give you a good idea of what different excursions will cost and which you are interested in. However, it is also a good idea to always budget a little extra for this part of your trip as you never know what opportunities you will come across or what sort of deals you will stumble upon.
6- Miscellaneous Purchases
This is the category of your travel budget that you want to add a little extra money to. This will cover things like any clothing or souvenirs you buy, beverages, postcards, tips and a whole host of other things. Whatever you think is an appropriate number to add into this section, add at least 25% more to it.
Putting it All Together
The key when it comes to budgeting for travel is to overestimate. One of the safest ways to budget is to add up all of the money in these categories and then once again add an additional 10% to 15%. When you are not at home you simply never know when unexpected expenses will arise, or what temptations may surface.
You are far better off over exaggerating your travel budget than underestimating it. If you end up coming home from your dream vacation with extra money in your pocket, that will be a definite bonus. However if you come home from your dream vacation to an unbearable credit card bill, then your wonderful vacation memories can often fade.
If you have finished creating your budget and find that the grand total is out of your reach it doesn’t have to mean the end of your vacation plans. The principle of a budget is to figure out what you have and what you can afford. If it looks like your trip is going to shift your bank account into overdraft then reconsider a few purchases, items or attractions. You still have time to cut down on costs and alter the plan to fit your lifestyle and your budget.
Lastly, avoid budgets that take into account only the basics. Not only will you often have less fun but you will often end up spending far more money than you originally planned to. Take into account what you can afford, leave some room for leeway, and make your dream vacation happen.
If you want it that badly, you will find a way to get it.