Creating a travel budget is easy – but creating one you can stick to is not. I think I can safely say we have all struggled to stick to a budget before. Whether it was for a night out with friends or a trip away, we have all come home with a lot less money than what we planned to. But while a little splurge on your last shopping trip may not be a big deal, being stuck in a foreign country with no money certainly isn’t the best way to spend your trip! This is why creating an attainable travel budget is so important. After years of travelling, here are the rules I follow when I create a travel budget. But most importantly – I’ll tell you how to stick to it!
Who needs a travel budget?
You need a travel budget if you want to travel, are travelling, or are planning on travelling. While creating a travel budget can seem daunting, it is easier than you might think. Once you have worked out what you want to see, your budget will ensure you can actually get there and do it!
Where do you want to go and how long do you want to spend there?
First, the fun part! Working out where you want to go is the most important part of your budgeting journey. There is no point budgeting for a 2-month trip in Cambodia if you are going to end up spending 4 months in Australia. Your budget just won’t stretch that far. Get online, talk to friends, read some travel guides. Take some time to work out which places you really want to visit on your trip.
Once you have worked out where you want to go, get a rough idea of how long you want to spend there. You can do this by creating a rough itinerary of your trip in your head. I say ‘rough’ because it is unlikely you will ever stick to this plan. The beauty of travel is its spontaneity and unpredictability! But by having a rough itinerary in your head, the better you will be able to budget.
Divide your travel budget into categories
Before working out how much you will likely spend on your trip, split your costs into categories. You may want to use more or less than the ones listed below, but a general rule of thumb is:
- Major travel
- Local travel
This should cover everything you want to do on your trip, and help you budget for every eventuality.
Do your research
There are hundreds of websites and resources online that will help you work out how much you should be spending in each of your chosen locations. Whether the trip you are planning is low-budget or expensive luxury, the information you need is easy to find.
I recommend looking at a few different sources and averaging out the cost. This will give you the best idea of how much you should be spending in each location. But if you want to be super cautious (like me) I usually budget at the higher end of the spectrum. That way I don’t get any nasty surprises.
Once you’ve done all that, apply this information to your categories. For example, if you plan to spend 4 nights in Luang Prabang and know the average cost of accommodation there is £8 a night, you can budget for around £32 for your Luang Prabang accommodation. Apply these costs to each of the categories for each location you want to visit on your trip.
Plan for the worst-case scenario
We had a few worst-case scenarios on our most recent trip. One was the Coronavirus pandemic, which meant our plans to earn money and travel in Australia were scuppered. Another was having to evacuate from Shingu to Osaka while travelling in Japan. Typhoon Hagibis was heading for the area, and the city planned to lock down and cease all public transport out of the area. To avoid being stranded we had to leave quickly – and lose money on our hotel.
While we all hope nothing will go wrong on our trip, something almost always will. So, it’s better to plan some buffer money to your budget. This will ensure you are covered when things go wrong.
Don’t think of your buffer as a set amount of money, plan for the amount of time you want to be able to cover yourself if something were to go wrong. That should guide you on how much extra cash you will need.
What do you want to take with you?
Any traveller knows packing light is essential. There is nothing worse than lugging huge heavy bags around on your back for weeks or months on end. Especially when you are on the move so much. Because of this, it is essential you know in advance what your must-have items are, and what you can afford to buy while you are out there.
Once you have created your list of things you want to buy on your trip, like extra sun cream or bug repellent, add money to your travel budget to cover these additional costs so you don’t eat into the fund you set aside for a tour you really wanted to do.
Can you afford it?
After completing the steps above, you may realise that you aren’t in a position to afford the trip you want right now. That leaves a few options – save more money and go later, or look for more affordable alternatives. Say you are planning a luxury trip to the Maldives, you could visit the stunning islands off the coast of Malaysia instead for a much smaller sum.
Another option is to earn money as you travel. You can learn more about ways to earn money online as a digital nomad here.
There is no right answer to which option you should try – it may even be a combination of all three. Just go with what makes you (and your travel budget) the most comfortable.
Use a travel budget tracker
So, now you know where you want to go, what you want to do, and how much it will cost you. You’ve planned for worst-case scenarios and you know how much money you want to save as a buffer. Now for the best part – spending it!
As I mentioned above, your trip will almost certainly take some unexpected turns. You may visit a city you never planned to see, spend longer than intended on that island you’d been lusting over, or you may meet some amazing people and travel with them for a while. You never know where your journey will take you, and that is the best part of the whole experience!
But, to make sure your budget also doesn’t take some unexpected turns, I recommend you use a budget tracker to help you keep tabs on your finances. Don’t deprive yourself. Don’t miss that once-in-a-lifetime thing just because you didn’t plan for it. Just make sure you are aware of what this could mean for your plans later down the line.
While creating a travel budget can be daunting, it is the best thing you can do before you travel. By knowing how you plan to spend your money and where, you will be able to truly enjoy your experience. Even better? You won’t be left worrying about affording a flight home if something goes wrong.
Do you have any other travel budgeting tips? Let us know in the comments.