The 3 Most Important Steps to Creating A Travel Budget

You have decided on a dream holiday and are itching to make a booking. But before you do, have you thought about the funds you will need?

One of the best ways of spoiling a vacation is to run out of money. It could mean cutting your trip short, borrowing from friends and family, or maxing out your credit cards. To ensure you can afford your break, here are the three most important steps to creating a travel budget you won’t blow.

1) Plan How Much You Will Need

For some people, budgeting is a way to get excited about a forthcoming trip. For others, it's a painful exercise because it can mean doing without and setting limitations. But it's a lot better than the alternative of fretting about your finances while you are away.

The first step is to work out how much you will need. Start your budget planning with the most expensive items, which will usually be your flights. If you're going to travel to multiple destinations in your trip, estimate the travel costs for each leg of your adventure. Another big expense is accommodation.

With an idea of how long you will be away, work out how much you will need for daily expenses such as food, museum entry fees, how you will get around, and communication. Many places have free Wi-Fi, but you won't always be able to rely on it. So, whether you use a local sim or international plan with your own provider, put this in your budget.

Include pre-trip costs in your budget planning, such as travel insurance, visas, immunizations, and a fabulous new wardrobe if you want to update your holiday look. And add a little extra to allow for emergencies and for the occasional treat such as an expensive meal, fun activity, and a few tacky souvenirs that will end up at the back of your wardrobe.

You may find it helpful to separate your expenses into three categories:

• Preparation expenses

• Vacation expenses

• Emergency funds

2) Saving for Your Trip

Once you have figured out how much you need, you can put a savings plan into operation. The earlier you start saving for your trip, the easier it will be to meet your savings goals. Be realistic about how much you will be able to put aside. Can you really afford a suite in a five-star luxury hotel, or would you be just as happy with a cozy room in a bed and breakfast accommodation for a fraction of the cost?

Here are a few simple savings tips to help you on your way.

• Open a travel savings account

• Automatically transfer funds each week or month

• Cancel nonessential subscriptions

• Dine out less at home so you can eat out more on vacation

• Cut other expenses such as nonessential subscriptions, cycle instead of driving, and bring your own lunch to work

• Resist impulse buys

• Stop raiding your coin jar

It's almost inevitable that you will have to make sacrifices; just try not to cut too deep. If you're still struggling to set sufficient funds aside, it might be time to get creative. For example, consider taking on part-time or seasonal work. Use apps such as Digit and Qaptial that help you save money without realizing it.

Saving a little each month toward your vacation can help avoid racking up a credit card debt that could be paying off long after the trip is over. With every dollar saved, that's one more dollar to spend on your exciting getaway.

Track Your Expenses

No matter how well you plan, there are always unforeseen circumstances that pop up while you're away. This can include getting a taxi because you missed the bus to the airport or a fun activity you hadn't accounted for.

Therefore, it's a good idea to track your expenses during your vacation to see how your budget is working out for you. It will show you whether you’re underspending, overspending or on point. If you're quickly going through your funds, the process will highlight where to cut back if necessary.

Track your finances on a spreadsheet or get a tracking app such as Trail Wallet, Toshl, or TripRider that will let you see how much you're spending on each category of your trip.

You Can Do It!

With discipline and a few handy tips, you can create a travel budget that works for you, saving you time, money, and stress.