One of the most commonly asked questions we get as frequent travelers is how to make a budget for travel. This can seem like a very overwhelming task, especially if you have not done a lot of international travel. It is difficult to know exactly how much money you need to save for your trip. The good news is that if there is a destination you want to travel to, there is always a way to budget and get yourself there!
This guide on how to make a travel budget applies to a trip of any length. These are the steps we follow when planning a six month trip and also a week long trip. The principles are the same: set a budget goal, save and hit that goal!
Step 1: Determine your flight and transportation costs
The first step to making a travel budget is to figure out your destination. Flights to certain destinations will be much more than others. Now this should not deter you from visiting certain destinations. For example, if you are flying from an East Coast city in the US, a flight to Vietnam will be much more than a flight to London. But ultimately the budgets might end up similar because you will spend much more day to day and on housing in London. Estimating flight costs is just the first step to figure out how much total you will need to save.
Once you figure out where you want to go, you’ll need to estimate how much your flights are going to cost. Flights are usually the most expensive part of a trip. In our experience, it is about 30% of the total budget (give or take depending on the destination).
Also consider additional transportation costs. If you plan to go to a few different cities, check train/bus/flight costs between those cities. Those additions will add up and should be considered in your total budget!
Real example: We recently booked a ten day trip in Europe and the flight was $700 round trip each from Milan. We also know we want to go to Prague during the trip. Roundtrip flights from Milan to Prague are typically around $70, so we know that is now incorporated in our total budget for the trip.
Step 2: Estimate your housing costs
The next step to plan your travel budget is to estimate housing costs. Similar to flights, this will be more or less depending on your destination! Depending on your timeline, we think it is a good idea to book housing early. If you find a great housing option that is fairly priced in the area, book it now. In most circumstances you do not even pay for the housing until you are actually at your destination. That means you can book your housing and add the costs to your total savings goal.
If you are planning on visiting multiple cities, average the housing options across your destinations to figure out your overall nightly goal. As long as you keep that as your average, you will stay within your set budget!
Tips for browsing housing options:
- Read blogs about the best places to stay in your destinations
- Check booking.com for hotel pricing and always read the reviews
- Check Airbnb for options and compare them to the hotel prices. Each city is different with their pros and cons for staying in an Airbnb vs a hotel!
For our 6 month trip around the world, we looked up how low we could go in price for housing yet still avoid shared rooms in hostels as much as possible. This number for us was an average of $40/night total for six months. You’d be surprised at the housing you can afford if you really do your research and plan ahead of time!
We were able to get a hotel room with a view of the Eiffel tower just 10 minutes north of the Champs Elysse for $50/night and Paris was one of our most expensive cities on the Euro. Don’t get us wrong, there were definitely times that the cheapest housing we were willing to accept was over $90 a night but those times were few and far between. We were able to balance those more expensive stays with destinations in Asia where housing was very affordable. Our housing for two months in Asia was an average of under $20 per night.
We were also lucky to have some friends around the world that had spare rooms or couches for us to crash on. It’s common for friends you make while traveling to want to show you their home city! Definitely take them up on the hospitality if offered because not only is it cheap/free housing, but you also get to see the city from a locals perspective.
Step 3: Plan for your daily spend
The next step to make your travel budget is to determine how much you plan to spend each day. This is not a perfect science because things will always go wrong and there will be unexpected expenses, but there is a way to estimate this cost.
Find the average costs in each destination
The best way to budget your daily spend is to research each country to get an idea of what costs may be. Luckily with a quick google search, you should be able to get an idea on the cost of a beer, drink and average meal in order to help you get an idea. Also in this research, you should determine the typical transportation in each city. If it is a very walkable city or has public transportation that is easy to use, transportation should not add too much to the daily spend. If you will be taking taxis/ubers around the city, those costs will add up each day.
It is crucial to do your research per location because some destinations are drastically different. A meal at a restaurant in Thailand is ~$4 vs a meal at a restaurant in Paris is ~$50. Also, a meal in Prague is drastically cheaper than a meal in Vienna. There are even big differences like this in European cities!
Know your travel spending habits
Your daily budget will also change depending on how you want to spend your trip. If having a night at the pub isn’t big on your to-do list, you can really cut down on expenses. Similarly, if you know that you are ready for some late nights partying, prepare to factor that into your daily budget.
Food is the most important part of the experience for some travelers. If you know you are going to want to eat at tons of different restaurants, take that account into your expected daily spend.
How to cut down your daily spend while traveling
There are so many ways to cut down on your daily spend! The biggest way is to limit the amount of meals you eat at restaurants. Pick 1-2 local restaurants you want to try in a city and then go to the grocery store to get picnic supplies or cook in your Airbnb for the other meals.
For us, we know that going out to bars with other travelers or meeting locals is a big part of our overall travel experience so our alcohol expenses tend to be a big part of our budget. In order to offset this in Europe, we like to eat breakfast and either lunch or dinner from the grocery store. On top of saving money, you end up eating in some really cool places by doing this! One of our favorites was a picnic on the North Sea in Amsterdam.
It is also legal to drink in public parks in many cities. We save tons of money when traveling by buying cheap beers from a grocery store and making our own little bar! We watched one of the most beautiful sunsets in Santorini by doing this, we just skipped the expensive bar tabs.
Remember that there is no right or wrong way to spend your money on your travel experience! This trip is for you to enjoy the best way for you. If you do not want to be budget conscious and indulge as you please, do it! Just take that into consideration when planning your overall travel budget.
Step 4: Add in the cost for activities
Activities are the next major factor for planning your travel budget. These are separate from your daily spend because you are not necessarily doing an activity everyday. We would classify an activity as any excursion, cooking class, museum entrance fee, ect. They are basically anything that costs money that you would consider an experience.
Although activities can really tear through your funds, if there is something that you truly want to do, it doesn’t make sense to skip it. You never know the next chance you’ll get to be in that location again. Similar to splurging on restaurants, activities are a crucial part of the travel experience. Simply add these activities costs to your travel budget when planning!
Those are all of the big factors that determine your travel budget. Again, remember that there is no right or wrong way to travel! It is completely up to you how you want to spend your money.
How to reach your travel budget goal
Now that you know how much you need to save for your trip, it’s time to set aside a weekly savings goal in order to hit it for your trip. Depending on how long your trip is and how much you need to save, this can be accomplished in a month or can take significantly longer. For example, we saved for eight months to travel the world for six months. But there have been other trips where we simply put money aside for a few weeks and were able to hit our goal.
Remember your why
Saving, especially for a period of extended travel, definitely takes grit to stay on track. There will be countless times that you’ll be asked to go to happy hour, out to dinner or some other plans and you might need to say no in order to stick to your savings goal. As much as you might have FOMO at the time, try to remember why you’re doing it. You won’t be thinking about that Friday night you skipped out on at the bar when you’re snorkeling in Vietnam, celebrating the full moon festival in Thailand or eating some very fresh pasta in Italy.
Ways to save
There are so many little things you can do that will help you reach your budget goal. You’d be surprised how small changes barely impact your life but make a huge difference in your overall savings. Here are a few small changes to makes:
- Meal prep your lunches for the week instead of spending money at Potbelly, Chipotle, etc…
- Cut down on going to the bars! Try and host more social events at your house/apartment.
- Cook nice dinners to take away the urge to go out to eat.
- Make coffee at home or in the office instead of going to Starbucks.
- Set a weekly budget and monitor it to stay on track for your goal.
We did all those things listed above in order to save for our original backpacking trip around the world. We cut going out to meals, stayed in on Friday nights to work on our planning and hosted Sunday boozy brunch instead of going to the bar. Cutting down on days that we would spend money at bars was a huge tool in our savings efforts.
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Pick up a side hustle
More and more people in this day and age are moving towards freelance work. This is a massive help for anyone trying to save extra cash as there are ample marketplaces to go to in order to try to find some extra work!
Depending on your current financial situation and how much you are making, a side hustle is necessary to reach your savings goals. Keep in mind that this is not a bad thing! It just means you are going to feel that much better when you hit your goal because you put in the extra work. It also means that you will hit your goal earlier than if you did not put in that additional hustle! Here are some side hustle ideas:
- Pick up serving or bartending shifts on weekends
- Look for babysitting gigs
- Sell old clothes or bags
- Drive for Uber/Lyft
How to stick to your budget while traveling
Ok so you thought saving for your travel budget was hard, sticking to your budget might be even harder! The important thing to remember is your daily average spend. It’s ok to go over some days because that’s travel, you have to adapt to certain circumstances.
Be kind to yourself and remember your average daily goal
Remember that ultimately you are on vacation! You do not want to spend each day stressing about your budget. There were plenty of times we overdid it at a karaoke night and blew over the daily budget. No big deal! The next day, just skip the fancy restaurant and eat a cheap meal from a grocery store.
Trail Wallet is our budget bible! It is so easy to set a daily budget for yourself in this app and then you simply submit each expense. In this app you can see your average daily spend and understand where you are overall with your budget. It feels weird at first to enter the expense each time you purchase something, but you quickly get used to it and don’t even realize you are doing it!
Have a contingency
If you can, have a contingency plan if you go over budget. That looks different for everyone but hopefully you are just able to factor that into your overall budget. Worst case, you need to tap into your credit limit and will pay it back when you can. Now we do not advise this but we definitely met people who were living that way and having a grand ol’ time!
Final thoughts about making a travel budget
Let’s be real – travel isn’t free! Talking about budgets are not always fun but it is an essential part of exploring the world. The good news is that travel is truly accessible to anyone and there are so many ways to travel on a budget. Some of the best stories come from budget travelers!
Most importantly, remember that your travel experience is completely up to you. Some people would rather ball out on a three day trip in a fancy hotel and five-star restaurants than extend that budget over a few weeks. That is totally acceptable! Your travel budget will extend as far as you make it.
We hope this guide on how to make a travel budget cleared some things up for you. You got this! Never hesitate to reach out to us with any questions – we love to connect with other travelers. Happy adventuring!