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How to Budget for Your Next Vacation

How to Budget for Your Next Vacation

Jenius Bank Team3/19/2024 • Updated 4/4/2024
Couple researching a trip on a laptop.
Planning ahead for vacation expenses may make your trip more enjoyable.Going on vacation is the perfect way to relax and escape the pressures of daily life. But before you fall in love with a five-star experience, consider how you’re going to cover the costs of your trip. The average cost of a week-long trip costs approximately $1,984 per person.1But that’s just the average… and above average vacations always look really nice, until you add up the bill. While you may be tempted to just swipe your card and (eventually) pay later for first class, there may be a better way to live large and still keep your finances intact. Vacation is supposed to be fun, and stressing about the price tag is not. So, let’s explore some ways to create a vacation budget for your next getaway.

Key Takeaways

  • Saving ahead for a vacation may help you avoid going into debt just to cover the trip. You may even be able to splurge on an upgrade or two!
  • Setting up automatic transfers for your vacation savings in your monthly budget could help your savings grow on autopilot.
  • Opening a dedicated, interest-bearing vacation savings account may help you save more money over time.

Step 1: Assess Your Current Financial Situation

Before booking your trip, take a moment to consider how much you could realistically afford to spend on vacation. Then, evaluate your current monthly savings. Can you set aside even more each month before you go? How much you can save may determine the length and location of your trip… if any at all. For example, a family of five may take a short trip close to home while a dual-income couple without kids may take a two-week trip abroad; in theory, their decisions would be driven by how much they can incrementally save just for vacation. And if someone is amid a debt payoff plan? Well, sadly, they may choose to forego vacation this year and plan for one in the future when they have a different financial situation.

Step 2: Research Destinations and Expenses

With a general idea of your travel budget, it’s time to research potential destinations and get a firm estimate of your trip’s cost. Check out hotel rooms, attractions, food, transportation costs, and any activities you may want to participate in.Track these costs at different locations and compare your options. Keep in mind that you may be able to score cheaper lodging by staying outside of tourist centers or you may be able to do more for less if you travel during off-peak times. Remember to budget for pet care, house sitting, and other expenses at home, as these costs could impact your travel budget too.

Step 3: Prepare for Unexpected Costs

Your estimated costs are just the beginning. Plan for potential hidden expenses and charges like airport and hotel parking, checked baggage, and more. Try to set aside a little extra so you’re not left in a lurch when you’re on your trip.2

Step 4: Start Saving Early

The sooner you start saving, the more you may be able to set aside. Saving early may also allow you to allocate smaller amounts over a longer period, which ultimately may feel easier. For example, if you’re traveling in six months, saving only $80 a week gets you pretty close to that average spend of $1,984 in the bank by the time you leave. But if you wait until two months before travel, the weekly set-aside is nearly $250 for that same end amount—and you’re likely to feel the pinch a bit more in your weekly spend.As you progress, set clear savings goals and celebrate when you hit each milestone. Make saving part of your monthly budget, and use automatic transfers to put saving on autopilot. Opening a dedicated high-yield savings account for your vacation fund could also put your money to work with compound interest. The longer you leave money in the account, the more interest it may earn, which could boost your overall savings. The more you shop your rates, the more fun you could have on your trip!

Tips for Sticking to Your Vacation Budget

Sometimes on vacation, when you’re feeling carefree, it’s hard to stick to your spending plan. Here are a few tips that may help you.
  • Account for all travel expenses and then some: Your vacation budget should cover necessities like lodging, activities, and dining. It should also include a buffer for impulse purchases and emergency costs.
  • Discuss the budget ahead of time: If you’re traveling with others, communicate your budget ahead of time. Explain how much you choose to spend on dinners out, upgrades, activities, and more. This puts everyone on the same page and may make it easier to stay within your budget. Think of it as Loud Budgeting, the vacation edition!
  • Be intentional with your (souvenir) spending: Vacations create memories that you carry with you forever. Consider prioritizing spending on activities you love versus things you buy. There’s an added benefit of avoiding the baggage fees from extra checked bags on the way home!

Final Thoughts

Saving for a vacation and building a solid vacation budget are doable. And the sooner you start, the more you may be able to save for your dream getaway. Plan ahead, figure out how much you need to save before your trip, and create a budget and savings plan that aligns. With these steps in place, you may be better prepared to enjoy your trip.Ready to maximize your vacation savings and put your money to work so that you can play? Open a high-yield savings account with Jenius Bank today.
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