Creating a vacation budget that allows for a fun time while saving money may sound like too complicated a task. But follow these simple tips to make sure your bank account doesn’t suffer while you’re unwinding this summer.
Vacation Budget Video Transcript:
Americans expect to spend about $1,200 per person on vacation, according to a travel survey conducted by American Express. But the US Department of Labor found that actual vacation spending is nearly 20% higher than that amount.
Vacations are supposed to be about rest and relaxation, but exceeding your budget is a surefire way to counteract the stress relief benefits from your trip. Carefully counting pennies while you’re away may not sound like fun, but with a little effort up front you can have your vacation and enjoy it too.
First things first, you’ve got to know how much cash you have available to spend. Racking up credit card debt to cover a vacation is never a good idea. Instead, open a separate savings account for your vacation funds. Once you have a good amount saved up, you can start planning your trip.
To make sure you stay under budget on your next vacation, try following these tips:
- Two thirds of vacation spending goes toward transportation and lodging. Don’t hesitate to cash in on frequent flyer miles or other loyalty rewards programs. Paying with rewards points is a great way to ensure you have more cash in your account when you actually arrive at your destination. As for lodging, consider using a vacation rental site like airbnb or vrbo, or for the truly adventurous, couchsurfing. Skip the chain hotels in favor of a less expensive and more local experience.
- If your ideal vacation spot is out of your price range, look for a budget-friendly alternative. If you’re dying to go to Tahiti but can’t afford it, try the Pacific coast of Nicaragua instead. Or if Disney is out of reach, take the kids to a local theme park. Postpone expensive destinations until you’ve saved up enough money.
- Set a daily cash budget. If you’ve got $400 left in your vacation savings account after paying for airfare and your hotel, divide it up over the course of your trip. For a one-week vacation that amounts to a little more than $50 a day. When you leave your hotel in the morning, just bring that $50 and don’t allow yourself to spend more.
- Don’t be fooled by marketing. Many tourist activities are incredibly expensive, and often disappoint. Get friendly with the locals and ask what their favorite things to do are. Chances are you’ll find yourself off the beaten path and saving money at the same time. While you’re at it—ditch the souvenirs in favor of postcards. What seems like a good purchase while on vacation is likely to end up gathering dust on your shelves later.
- If all you really want is to read books on the beach while sipping a tropical beverage, consider an all-inclusive resort. The Caribbean and Central America are full of good deals. If you pay for everything up front, then you’re nearly guaranteed to stay within your budget. And staying within your budget will always be the ultimate stress-free vacation.