If you want to travel the world—or even if you just want to take advantage of those well-earned vacation days—a budget doesn't have to get in your way. That being said, financial setbacks can definitely make the booking process a little more daunting. And making sure you only take a vacation once you're financially comfortable can help you avoid stress in the long run. So how do you make room in your wallet for wanderlust?
There are tons of things you can do to make your money stretch as long as you reconsider your priorities, plan, and carefully choose each item on your itinerary with an agreed upon budget in mind. We spoke with Kristin O'Keeffe Merrick, a financial advisor at Raymond James, to figure out the best ways to save up for a trip as well as how to stick to it once you're on vacation so that you don't burn through your savings. Before you jet off, read her tips to find out how to create a travel budget.
What To Sacrifice While Saving Up
If you're on a tight budget, you may have to make some small sacrifices while saving up for bigger transportation and accommodations. It's important to "challenge yourself to cut back on the intangibles that drain your account so you can start allocating that money toward a vacation budget," O'Keeffe Merrick reminds us. And this will probably be a lot easier when the reward is a hammock on some faraway beach or visiting friends in a city you've always wanted to see.
"There are a million things to sacrifice, but here are some easy ones: beverages," O'Keeffe Merrick recommends. Think about how much money you'd save if you started making coffee and tea at home, and cut back even just a little on juices, smoothies, bottled water, and alcohol. Get creative, and think about what's the most realistic thing to cut for your lifestyle. For some, this might mean limiting taxis and ride shares, and for others, it might mean no more workout classes, eating out, and paying for cable.
Consider the Adult Piggy Bank
The little stuff really does add up. So where do you put that extra money you've been saving while not splurging on transportation, beverages, and costly outings? Rather than following a super-strict budgeting rule while you're saving up for a trip, O'Keeffe Merrick believes in using a more flexible approach. For example, the 50/30/20 might be a little unrealistic for some incomes and needs. If you aren't familiar with this, 50% of your earnings go toward rent and whatever else you consider "essential" to your lifestyle, 30% is spent on "fun" things, and 20% is put away in savings.
But it can be hard to differentiate between the categories.
"I always recommend to my clients that they should have a bucket where they put money aside and earmark it for" something like a vacation. "This is a guilt-free way to spend" while you're on the "vacation because this money has already been allotted to vacation" specifically, she says. Think of it like an adult piggy bank. You can only use it for a specific thing, and you don't have to put aside a specific percentage of your earnings, since lifestyles and necessities may vary month-to-month.
Creating a Budget Within a Budget
Once you have enough money saved up to go on vacation while still comfortably affording rent and other necessities, take care of the big ticket items first. And by that, we mean booking flights and accommodations. Since some locations and seasons are much more expensive than others, try to be flexible so your dollar will stretch a little further. If you take advantage of online resources like Flightscanner, you'll be able to avoid some pitfalls like picking the most popular, overpriced time to visit.
If you end up going on a vacation that you couldn't afford, "the aftermath of an expensive trip will leave you with a big credit card bill, a lot of guilt, and more stress," O'Keeffe Merrick says. So if you want to splurge on that luxe retreat or adventure, then you may have to wait until next year. But choosing cheaper locations and more affordable accommodations is the best way to avoid overspending can also go a long way. Plus, if you don't use your entire budget on these things, you'll still be able to enjoy yourself once you reach the destination.
Come Up With a Plan Ahead of Time
If you're traveling alone, you come up with a rough outline for the trip so you know where you should allocate your funds. Group travel, on the other hand, is a whole other story. "Group trips are tricky, especially when everyone has their own individual way of dealing with money." O'Keeffe Merrick says the key is to "make sure you know what group expenses you will be responsible for." So while you can't plan as much in advance, you can still ask the group about some basics.
For example, "are you staying in a hotel and putting drinks on the room?" Having this conversation before the trip will help you avoid getting stuck with the pool bar tab all weekend long and then later chasing everyone on Venmo. You can also ask what the itinerary will look like and how many group dinners you should prepare yourself for. "Knowing all this will enable you to avoid any surprises" so you can plan accordingly.
How do you devise a travel budget before, during, and after a trip? Share your tips with us in the comments below.