Vacations should be at the forefront of everyone’s annual budget. Did you know that people who spend their money on experiences are happier than others who spend most of their money on material items?
It’s no surprise when you think about it. Experiences can’t be quantified, and we can hold onto them for the rest of our lives. Making memories with your loved ones is surely worth every penny, but not if you’re weighed down by the stress of money when you’re supposed to be enjoying yourself. Let’s talk about how to set a vacation budget so you can relax this summer!
1. Do Your Research
With a keen eye looking for cheaper alternatives, you’d be amazed by how much money budget traveling can save. The sooner you start, the better!
Choosing the right airline, booking in advance, and finding discounts on lodging can go a long way. For most travelers, the three biggest categories are the flight, other transportation, and lodging. Reducing these costs will make a big difference in your vacation budget and will only require some research ahead of time!
However, you will need to do some digging. Not everything is always as it seems. For example, a plane ticket may seem to save you $50 at first, but not if it has a $60 luggage fee and the other doesn’t.
This applies to every aspect of travel. You may find a rental car for half of the price, only to have to pay twice that amount in insurance and fees upon arrival. Always read customer reviews before making any decisions, as they’ll typically tell you what you need to know!
Also, what about planning a vacation on a budget? You don’t have to fly to Amsterdam for a week to relax when you could easily take a road trip somewhere in your Province, fly to the US, or go camping! There are plenty of cheap vacation ideas to choose from, so consider looking into your options rather than trying to save on a vacation that’s bound to be expensive!
2. Pay in Advance
Rather than trying to save up throughout an entire year and fighting the temptation to dip into your vacation fund when money gets tight, try booking what you can in advance.
Let’s say you plan the trip 6 months out. In that case, book the flight as soon as possible, which will likely save you a substantial sum of money. Save up for a couple of months and book your rental car if you’re going to have one, and start booking your lodging as far in advance as possible, allowing you to find the best deals before they’re taken.
This way, you’ll be more motivated to continue saving until your vacation actually begins, as most of your expenses are covered. When you go on your vacation, you’ll be able to relax knowing that your biggest expenses are already paid for, and now you can spend your remaining budget on leisure.
A great time to start planning and paying for these is when you have the biggest surplus. Holiday bonuses, summer jobs, or peak seasons with overtime pay are perfect times to start booking. The further you pay ahead of time, the more money you will save!
3. Set a Limit
Sometimes, the limit is set for us by what we have in our bank accounts, but it’s good to have an idea in mind. Assuming you were able to follow the advice above and book things in advance, it should be easy to set a reasonable budget for your trip. Let’s say it’s 1-week long and you plan on eating at restaurants once a day, you need a couple of souvenirs, you’re buying tickets to two attractions, and you plan to buy groceries for the rest.
In that case, budget how much you’re willing to spend on all of those combined, add it up, and give yourself a little leeway if possible. The furthest in advance you plan for this, the more time you will have to save.
However, if you’re coming up to your vacation and you’re worried about overspending, then you may have to rely on credit or personal loans for part of the expense. Now, that’s okay to do, as long as you aren’t putting yourself in too deep of a financial hole. There are certainly worse reasons to go into debt, but make sure you’re sticking to your budget either way!
4. Write Down Your Goals
Writing down both your savings goals and your overall budget for the trip should be a priority. Did you know that we are far more likely to achieve the goals that we’ve written down?
As far in advance as possible, write down how much you’ll need to save each day, week, or month to prepare for your expected budget. Do your best to stick to your goals as time passes so you won’t have to worry as much at the last minute.
When you break down a $2,500 budget for your vacation, that boils down to $6.85 per day. That’s less than the cost of lunch or two coffees from your favorite coffee shop each day. However, if you wait until the last two months to save, you’ll need to save $41.66 per day or $1,250 each month, which isn’t feasible for most households.
Of course, a family vacation is likely to cost even more than a vacation for one or two people. Some vacations can cost a lot more than $2,500, especially if it’s longer than a week. That’s why it’s important to learn how to budget.
5. Be Smart About Saving
When a vacation is four or five months away, it’s very easy to think of it as a “later problem”. However, if you break out of that mindset and start saving now, a few dollars today could save hundreds tomorrow.
Once you have a savings goal in mind and you’ve written it down, find some new ways to earn or put away that extra cash. 1 in 3 Canadians live paycheque to paycheque, so if you’re struggling to save that $5 to $15 a day, then it’s time to use some smart savings techniques.
There are many strategies to choose from. You can open a separate account for your vacation fund and not touch the money that’s in there. If you get a direct deposit or a cheque from your job, then try putting away any cash that comes your way!
Your options don’t end there. You can take on a side hustle, ask for extra hours or a raise at work, cancel some of your subscriptions, and more. From there, use whatever extra money you earn or save for your vacation planning!
Whatever you choose, just make sure you can handle it and that you aren’t going to struggle in your daily life because of it. Much like dieting, try not to be overly restrictive and end up quitting as a result.
6. Stick to Your Budget
Again, it’s okay to go a little over and use your credit cards or whatever you need. The last thing you want to do is stress about money while you’re on vacation, as it will ruin your once-a-year fun. That’s why adding some wiggle room into your budget is so important.
It’s hard to stick to a budget while on vacation. We see something we want and we go for it. However, this can quickly go overboard if we aren’t careful.
At the beginning of the day, while on the trip, think ahead to plan out your day. Consider where you will be spending the most money. If you’re away from your hotel room or Airbnb for most of the day, head to the grocery store and pack plenty of food with you to avoid overspending at restaurants.
With enough planning and enough wiggle room in your budget, you shouldn’t have a problem sticking to the plan!
Set Your Vacation Budget Today
Planning a vacation budget doesn’t have to be overwhelming, so don’t be too hard on yourself. If you’re looking forward to your vacation, then just think about your spending and how you can earn more money in your everyday life, and think about how hard you worked for it when you’re on the trip. If you can manage that and give yourself enough time to plan ahead, then you shouldn’t have any problems!
Stay up to date with our latest financial tips and feel free to contact us with any questions or for help with your financial planning!