Plan your vacation budget in 4 steps
Budgeting for a trip can be a bit tricky if you’ve never done it before. Here are 4 tips that will make this easier.
1. Do you have a travel fund?
Before making any grand travel plans, ask yourself first if you have the means to travel?
Being a globetrotter is a luxury and by no means a necessity. Travelling doesn’t make the cut in Maslow’s hierarchy of needs.
If your finances are in a sorry state, you should focus on fixing that mess rather than packing your bag and grabbing your passport.
Travel, sure, but never at the expense of paying down debt or planning your retirement.
2. How much do you set aside?
There are two schools of thought when it comes to calculating how much money to set aside for your vacation.
The first consists of planning the trip and anticipating all your expenses while abroad:
- Visiting tourist attractions
- Extra for baggage
Remember to set aside an extra 10% for the unexpected.
You can keep track of it all with a trip planner app . To use such a planner, you need to already have a good idea of what your trip will look like and stay the course.
The other approach is to save on a regular basis, regardless of your destination. The total amount will determine the type of trip you are able to take.
3. Start saving!
You will know how much money needs to be set aside by figuring out how much your trip is likely to cost and when it will happen.
For example, if you plan to visit Italy in one year and you estimate the trip will cost $6,000, you’ll need to top up your travel budget by $500 a month.
There are other options available to you if this is not a realistic amount:
- Push back the travel date until you have enough money to go
- Plan a less luxurious trip to reduce costs
- Review your finances from top to bottom to cut expenses and divert more money to your travel fund
- Plan a different trip based on the amount of money you have actually saved
Make a budget or review an existing one to get a clear idea of your income and expenses.
It is recommended to open a separate savings account for your travel fund, one that is separate from your chequing account. You will be less likely to dip into it and you will be able to see it grow more easily.
4. Let your guard down… only after you get back
Taking care of money matters while on holiday does burst your vacation bubble a bit… but you have to know if you’re sticking to the budget you set for yourself.
This exercise also allows you to make adjustments along the way.
Use one of the following apps to simplify your life:
If you are sharing expenses with another person, use Tricount to divvy up the bills.
Navigating exchange rates
Use an app to convert foreign currencies into Canadian dollars, such as XE.