I used to be one of those people who believed that travel was not within my means, but everything changed when I started budgeting. Suddenly, I didn’t need to shell out $5000 on a trip anymore. I could plan a trip for a whole lot less by researching and planning in advance. And here’s the best part – creating a travel budget is way simpler than you might think!
In this post, I’ll share with you the 5 steps for developing a travel budget so that you can make the most out of your trip, whether you have $3000 to spend or $500!
How Much Money Do You Need to Travel?
Let’s start by addressing a common question: how much money do you need to travel? Is $1000 enough? Or do you need $5000?
Unfortunately, there’s no one-size-fits-all answer to this question, as everyone’s comfort levels and travel needs vary.
You can easily get away with spending $1000 on a trip if you plan in advance and opt for budget-friendly accommodations and activities. With $1000, you could consider backpacking in Southeast Asia, where the cost of living is relatively low, or embark on a shorter trip to a nearby destination if you can find good deals on flights. However, $1000 may not be enough for a lavish or extended trip to more expensive locations.
On the other hand, if you have a budget of $5000, you have more flexibility and can explore a wider range of options. You could potentially visit multiple countries, stay at a nicer hotel and plan a variety of activities without worrying too much about overspending.
How to Travel if You Don’t Have Money
What if you don’t have any money set aside? Can you still travel? The answer is yes, but there’s a caveat. At the very least, you’ll need to cover the cost of your flight to your destination. Once you’ve managed that, there are ways to sustain your travels by earning money abroad and finding free accommodations!
Here are some tips to consider if you don’t have any money saved up for your travels:
1. Get a Holiday Work Visa
If you don’t have any money to travel (but have time) consider applying for a holiday work visa. By working while traveling you can offset some of your expenses. My friend was able to live in New Zealand for 3 months by applying for a holiday work visa and getting a job at a coffee shop. Click here to find out if you’re qualified for a holiday work visa as an American!
2. Complete a TEFL Certification
Do you like to teach? If so, you can complete a TEFL (Teach English as a Foreign Language) certification and travel while teaching English. The best part about TEFL is that you can complete your certificate online so that you can secure a job before you even board the plane.
3. Try WWOOFing
If you’re on a super tight travel budget, WWOOFing is a great option to get your room and board paid for while traveling.
“WWOOF” stands for “World Wide Opportunities on Organic Farms” and is a program that connects volunteers with organic farmers and growers. The program allows individuals to exchange their labor for room and board on organic farms all around the world. The specific arrangements can vary depending on the host farm, ranging from private rooms to shared spaces and communal meals.
4. Consider Couchsurfing
If WWOOFing isn’t really your thing (but you need a free place to stay) consider couchsurfing. It’s a great way to meet locals and other travelers. Digital platforms like CouchSurfing and BeWelcome are great resources for finding free places to stay. But, keep in mind that the accommodations will likely not be luxurious, so you’ll have to be open minded and take what you are given.
5. Look Into Free Camping Options
Alternatively, camping is another great option if you need a free place to stay. Freecampsites.net is a great resource for free camping. However, keep in mind that flying with your camping gear might incur additional fees for checking larger bags. It’s essential to include this expense in your travel budget. I also recommend looking into transportation options to and from your campsites so that you don’t get stranded!
Whatever route you choose to take, remember to be financially responsible. No trip is worth going into debt for.
Why Is Budgeting Important for Travel?
Without further ado, let’s start budgeting!
When it comes to planning a trip, developing a budget is an important first step. Setting a budget will ensure that you don’t overspend and find yourself needing to cut your trip short or struggle to make ends meet when you return home.
Plus, budgeting can help you with the planning process. Knowing how much you can spend on the different aspects of your trip will set some parameters to make the planning process less overwhelming. For instance, instead of looking at all of the hotels in the area you plan to visit, you can narrow your search to just the hotels that fit within your budget.
So, how do you develop a travel budget?
How to Create a Travel Budget: 5 Simple Steps
Below are the 5 simple steps for developing a travel budget.
1. Determine How Much You Can Spend on Your Trip
When planning a trip, many people believe that the first step is to decide on the destination and duration. However, I believe the true starting point is reviewing your finances to determine your total available funds. Understanding exactly how much money you have to spend on your trip will be the foundation of your planning process.
Begin by taking a look at your savings and checking accounts. This will give you a clear sense of your current financial situation and how much you can allocate to your trip. Financial experts suggest having one or two months’ of living expenses in your checking account, with some recommending an additional 30 percent as a cushion. For your savings account, having enough to cover three to six months’ worth of basic expenses is a recommended goal.
Ideally, this means that you should have at least 4 months of living expenses in your accounts before booking your trip. However, if you don’t, it’s still possible to have a wonderful trip by choosing budget-friendly accommodations and activities.
In an ideal scenario, consider setting aside approximately $1550 for a domestic trip and $2300 for an international trip (as long as this doesn’t dip into your four months of living expenses). This initial budget can be adjusted as you research places to stay, transportation options, and more.
Keep in mind that the total amount you decide to spend should include a buffer for unexpected emergency expenses.
2. Decide on the Duration and Destination
Once you’ve determined your trip’s budget, you can leverage this number to make decisions regarding your travel destination and the duration of your stay.
When planning a trip with a specific budget in mind, it’s essential to consider both the initial costs and day-to-day expenses of different locations. For instance, as an American traveler, visiting places like Southeast Asia might entail higher initial costs, such as expensive flight tickets and visa fees, but you can expect lower day-to-day expenses once you’re there. On the other hand, traveling domestically might offer cheaper flight options, but accommodations, food, and activities could be more costly. And then there are destinations like Europe, New Zealand, and Australia, where not only will flights be expensive, but the day-to-day expenses can be quite substantial as well.
Researching ahead of time will give you a good sense of the overall cost to reach your destination and the average daily expenses you can expect. Keep in mind that by remaining flexible with your flight dates and accommodation choices, you might discover affordable options for a trip that might have initially seemed financially out of reach.
3. Estimate Your Travel Expenses: What to Include in Your Travel Budget
After you’ve decided where you want to visit and for how long, it’s time to start crunching the numbers. You’ll want to estimate exactly much you can expect to spend on the different aspects of your trip. In order to arrive at these numbers you’ll want to decide what your priorities are. Would you rather stay at a nice hotel or spend more money on activities? Understanding your priorities will help you delegate your resources.
With this in mind, let’s discuss the various travel expenses you can expect to have. We’ll start with the high ticket non-negotiable items and then discuss the miscellaneous expenses. Remember that as you start researching the prices for these items, you may decide that you’ll need to change gears and travel somewhere more affordable or for a shorter period of time.
Transportation to the Destination
The first expense to consider is the cost of transportation to your chosen destination. This includes the cost of flights, train tickets, bus fares, or car rentals you’ll need to get to where you’re going.
When calculating these costs, the more flexible you are with travel dates, the cheaper your tickets will be! By traveling during the off season or on weekdays and using date search options when booking flights, you can find the best deals. You can also find better deals by being open to alternative airports or routes. Sometimes, flying into a nearby airport and taking a bus or shuttle after can be more cost-effective then flying directly to your destination. Being open minded to indirect routes and layovers can also lower the price of your fare.
If you’re planning well in advance, I also recommend signing up for airline newsletters and fare alerts! This way, you can stay informed about special promotions, discounted fares, and flash sales.
And lastly, if you’re a frequent traveler, joining loyalty programs and credit card reward programs can lead to significant savings! Accumulating miles or points through these programs can help offset the cost of flights and other transportation expenses. I recently travelled to Chicago for free by signing up for a United Airlines Credit Card in advance and unlocking the 50,000 introductory airline miles. Just be cautious of yearly fees as these can offset the savings you gain from getting a free plane ticket. Click here for the best travel credit cards of 2023 according to NerdWallet.
Transportation within the Destination
Next you’ll want to research the transportation options available within your destination. Once you land, consider how you plan to get around. Will you be relying on public transportation, hailing taxis, using scooters, renting a car, or perhaps opting for bikes?
If you’re considering a rental car, it’s essential to research the parking options available. Some historic cities, like Rome and Venice, have narrow and winding streets with limited parking space, making it challenging to find parking spots. Meanwhile, densely populated cities like Mumbai, Delhi, and Kolkata face constant parking issues due to the sheer number of vehicles on the roads. Therefore, thoroughly researching the parking situation before committing to a rental is crucial.
For prices, check out Discover Cars to book cheap car rentals anywhere in the world and Busbud to find cheap bus and train tickets.
Accommodation
Now consider where you’ll be staying during your trip. This is one of the areas where you can save a ton of money depending on your preferences and comfort level! You can book a hotel or vacation rental if you have a larger budget or stay at a hostel, campsite or even couchsurf if you’re on a tighter budget. If you plan to stay in one area for a longer period of time, consider booking a short term apartment rental.
Meals
Next, it’s crucial to consider your food expenses during your travels. Take some time to look into the cost of dining out at restaurants or the price of groceries if you plan to cook your own meals.
Keep in mind that food expenses can vary depending on your destination. For instance, if you’re traveling to western Europe, Australia, or New Zealand, dining out will likely cost you a similar amount as it does in the US or Canada. However, if you’re heading to South America or Southeast Asia, you can expect food to be generally cheaper. For these regions, you can estimate spending around $15-$20 USD per meal in western Europe, Australia, or New Zealand, and around $10-$13 USD if you’re traveling to South America or Southeast Asia. Keep in mind that by avoiding soda and other drinks at restaurants you can save a lot of money in the long run.
With this being said, cooking your own meals and packing snacks will consistently be the most budget-friendly food option while traveling. Keep this in mind when deciding where you want to stay. Although a hotel may be cheaper than staying at an Airbnb, having access to a kitchen may end up making it the cheaper option!
Travel Insurance
Many travelers will dismiss travel insurance as an unnecessary expense, but that couldn’t be further from the truth. It’s one of those things you hope you never need but will be grateful to have if an unexpected situation arises. Travel insurance can provide coverage for medical emergencies, trip cancellations, lost baggage, and other unforeseen circ*mstances.
When it comes to choosing a travel insurance that’s right for you, there are plenty of options available. Some popular companies include Allianz Global Assistance, Travel Guard, World Nomads, and AXA Assistance. Additionally, online comparison websites like Squaremouth, InsureMyTrip, and PolicyBazaar provide a convenient platform for comparing and purchasing travel insurance plans from multiple providers. These platforms allow you to compare coverage, prices, and customer reviews.
As someone who travels frequently, I personally have an annual travel insurance policy with Travel Guard. Opting for an annual policy can save you money in the long run if you travel multiple times within a year.
Visas and Documentation
Determining whether you need a travel visa is a relatively straightforward process, thanks to the power of the internet. With a simple Google search, you can easily find the information you need. Start by typing in “visa requirements for [your nationality] traveling to [destination country].” The search results will typically include official government websites, embassy or consulate pages, or reputable travel resources that provide up-to-date visa information.
Phone Service
If you’re traveling abroad, don’t forget to factor in the cost of phone service. Staying connected while traveling is crucial for accessing maps, travel apps, the internet, and keeping in touch with friends and family (even if it’s just a quick text to let them know you’re safe).
One option is to contact your current mobile service provider and ask about international roaming plans. However, these plans can be expensive and may not be the best bang for your buck. Purchasing a local SIM card once you arrive at your destination may be a more cost-effective solution.
In certain parts of Southeast Asia (e.g., Thailand, Vietnam, Cambodia) or some African countries (e.g., Kenya, Nigeria), you can find local SIM cards for as little as $1 to $5 USD. These basic SIM cards typically include a small amount of data and some call minutes. However, in many European countries and some parts of North America, the cost of local SIM cards tends to be higher, ranging from $10 to $30 USD. The advantage is that these SIM cards often come with more data and call minutes compared to the basic ones.
If neither of these options suit your fancy, consider investing in a portable Wi-Fi device or pocket Wi-Fi rental. Check out TravelWifi for tons of convenient choices.
Currency Exchange and Transaction Fees
When creating a travel budget, it’s important to calculate the currency exchange for where you’re going and be mindful of any transaction fees that may pop up. These costs can quickly eat into your budget if you’re not careful.
One way to calculate currency exchange and transaction fees is by researching the exchange rates ahead of time. Online currency converters and financial institutions’ websites often provide up-to-date exchange rate information. You may also consider getting a travel-friendly credit card or prepaid travel card. These offer competitive exchange rates and lower transaction fees. Some popular options are the Brinks Prepaid Mastercard and PayPal Prepaid Mastercard.
Medical Expenses
If you’re traveling abroad, you should always consult with your doctor or visit a travel clinic to determine which vaccines to get and how much they will cost you. For more information, you can visit the Centers for Disease Control and Prevention website. Click here to find a travel medicine clinic near you.
Activities and Attractions
When planning your trip, take some time to think about the places you want to visit and the experiences you wish to have. Depending on your budget, you may choose free activities like site seeing and hiking over guided tours and amusem*nt parks. Additionally, you can often find cheaper alternatives that are just as enjoyable as their more expensive counterparts, like opting for scuba diving instead of snorkeling.
Doing some research on free activities in advance will prevent you from getting overwhelmed and falling into an obvious but pricey tourist trap. For researching things to do, I’m a big fan of using Reddit. The r/travel subreddit is a great place to start! There, you can find valuable insights, recommendations, and firsthand experiences shared by fellow travelers.
Emergency Fund
Now let’s talk about an emergency fund. You won’t want to dip into this cash unless you absolutely need to. This fund should be reserved for situations when you absolutely need it, such as lost or stolen items, personal items (that you forgot to bring and now need to rebuy) and more. As a rough estimate, having an emergency fund equal to about 5% to 10% of your total trip budget can be a good starting point. For example, if your total trip budget is $5000, you might consider setting aside $250 to $500. The actual amount you choose to set aside may vary based on your unique circ*mstances and comfort level.
Remember, emergencies can happen, and it’s better to be prepared.
Miscellaneous Expenses
Lastly, there’s the miscellaneous expenses. These are hard to predict but can include souvenirs, gifts, gratuity charges at restaurants and more. Set aside as much as you can afford for these miscellaneous expenses.
4. Set the Budget: Travel Budget Example
Now that you know what expenses you can expect during your travels, let’s talk about budgeting. Unfortunately, I don’t know how much money you’ve saved up for your trip, so I can’t give you an exact breakdown of how much money to allocate for each category. But I can give you a rough idea.
Here’s an example of a travel budget for a $2500, one-week trip to Europe:
- Transportation:
- Round-trip flight tickets: $800
- Local transportation (trains, buses, metro): $200
- Total transportation budget: $1000
- Accommodation:
- Budget-friendly hotels and hostels: $500
- Total accommodation budget: $500
- Food:
- Eating out at affordable restaurants: $200
- Grocery shopping and snacks: $250
- Total food budget: $450 (or $64 a day!) Simply calculate food budget/days traveling to arrive at this number.
- Activities and Entertainment:
- Museum and attraction entrance fees: $100
- Walking tours: $100
- Total activities and entertainment budget: $200
- Travel insurance: $50
- Travel insurance: $50
- Total travel insurance budget: $50
- Communication
- Local SIM card: $50
- Total communication budget: $50
- Miscellaneous:
- Souvenirs and gifts: $100
- Total miscellaneous budget: $100
- Emergency Fund:
- Emergency fund (10% of total budget): $200
Total travel budget: $2500
By sticking to this budget, you can expect to spend $2300 (if you don’t dip into your emergency fund).
5. Track Your Expenses
At this point, you’ve successfully developed your travel budget. However, I’d like to emphasize a crucial final step: tracking your expenses. The importance of tracking your expenses while you’re traveling cannot be overstated, so even though this step technically happens after you’ve created your travel budget, I wanted to mention it anyway.
A travel budget is useless if you don’t actually track your expenses. While much of this work can be done before you ever board your plane, some tracking will have to happen while you’re on your trip. By booking accommodations and flights well in advance, many of your big ticket items will already be accounted for. You can also purchase tickets to certain attractions ahead of time and track those costs while you’re still at home. However, it’s essential to track your food costs, souvenir costs and any miscellaneous expenses while you’re at your destination.
To help you stay on top of your expenses during your travels, here are some effective ways to track them:
3 Ways to Track Your Expenses While Traveling
Here are 3 methods for tracking your expenses while traveling.
1. Use a Tracking App
Download a budgeting and expense tracking app like Mint, PocketGuard, or YNAB (You Need a Budget). These apps sync with your bank accounts and credit cards, allowing you to categorize expenses, set spending limits, and provide real-time updates on your spending. This is my go to method, and I my personal favorite app is Mint.
2. Maintain a Spreadsheet
If you’d like a more old school method, you can maintain a budget spreadsheet on your phone, computer or even in a notebook. Create columns for different expense categories, such as transportation, accommodation, food, and entertainment. Regularly update the spreadsheet with your expenses to keep track of your spending.
3. Track Your Bank Statement
If you charge everything to one credit or debit card, you can track your expenses within your Bank account app by looking at your spending summary. You can add up your expenses each night and keep track of your spending that way. This method won’t automatically separate your expenses into different categories, but still works if you don’t mind the extra work at the end of the day.
Whichever method you choose, remember that the key to effective expense tracking is consistency. Make it a habit to check and review your expenses daily (even if you’ve chosen an automatic tracking method) and make adjustments as needed to stay within your travel budget.
To Wrap It Up
Creating a travel budget is an essential step in planning any trip. By understanding your available funds and allocating them wisely, you can ensure a stress-free and enjoyable travel experience. Although it may initially seem daunting, the process of budgeting for travel can be simplified by following a few key steps.
First, you’ll want to determine how much money you should spend on your trip using a simple formula that takes into account your financial situation and travel goals. Next, you’ll want to allocate funds to different aspects of your trip, such as transportation, accommodations, and activities, based on your priorities and preferences. Remember to research and compare prices to save you tons of money in the long run! And lastly, you’ll want to track your expenses while traveling (which is arguably the most important step!)
By creating a well-planned travel budget, you can make the most of your resources and ensure that your trip is affordable and fulfilling. So, don’t let the idea of budgeting discourage you from exploring the world. Embrace the process, and soon you’ll be on your way to unforgettable travel experiences (within your means!)
