Last Updated on February 16, 2022 by Nellie Huang
For me, budgeting is part of the fun of trip planning. It’s the first step in my planning process, and it often makes me feel that I’m getting closer to making the trip a reality.
I know it’s not the same for everyone; budgeting can be a pain if you’re not the kind who likes to research and plan in advance.
But budgeting for a trip can give you a peace of mind, especially if you’re going on a long trip, and make sure that you won’t run out of money halfway through the trip. It only takes a few simple steps to save yourself from spending the whole trip stressing about cash flow.
Table of Contents
- How Much Money Do You Need for a Trip?
- How to Plan Your Travel Budget: Steps to Take
- Practical Tips to Help You Save Money for Travel
How Much Money Do You Need for a Trip?
Your destination will of course be the main determinant for your budget. For travels through Southeast Asia, you’ll definitely need far less than if you were to travel through Europe or Australia/New Zealand.
For my first trip to Europe, I estimated an approximate expenditure of $2000 in a month; while my three-month volunteering trip in Tanzania (where my accommodation and food were covered) only cost me around $1500, and my five-month trip through South America set me back at $10,000.
Your budget also depends on your travel style — you can save money by staying in hostels and couchsurfing to splurge on activities like scuba diving and bungee jumping. It all boils down to what your priorities are.
How to Plan Your Travel Budget: Steps to Take
Whether you are a novice or an expert traveler, keep in mind that you can travel the world without breaking the bank.Here are a few steps to take when setting your budget.
1. Identify your big-ticket items.
Start with the biggest expenditure for the trip, which is usually the air ticket. There are a few things to consider to get the cheapest flights.
First, it’s best to be flexible with dates and destinations. Airfares vary depending on the day of the week, time of year, and holidays. It’s always cheaper to fly during the middle of the week than on a weekend, or during a major holiday like Christmas. I usually use Skyscanner to search for flights in an entire month to get an overview of airfares and pick out the cheapest day to fly in that particular month.
Instead of flying to a place with an expensive flight, fly somewhere nearby that is cheaper to get to. For example, fly into London Stansted instead of Heathrow, or Long Beach rather than LAX to get cheaper deals. If you just want to travel and don’t know where to go, Skyscanner has an “Explore” feature that allows you to put in your home airport and see what routes have the cheapest fares.
It’s also wise to be flexible on the route you take as well. Sometime you can save hundreds just by taking a detour instead of flying direct. For instance, flights to Bangkok are cheaper than flights to Singapore, so you can first fly to Bangkok and catch a cheap flight on a budget airline to Singapore.
If you are planning an extended trip spanning across continents, booking a RTW (round-the-world) ticket can be a cheap and convenient way to fly around the world. You can easily get your RTW tickets directly with the airlines, but sometimes you can get a better deal by booking through a third party such as Airtreks. Third party bookers can mix and match from all available airlines (excluding budget airlines) to find you the best deal.
2. Estimate your expenses for accommodation, meals, and transportation.
Once you have your destination figured out, check Lonely Planet guidebooks and wikitravel.org to find the approximate cost of living in your destination.
Look for hotel rates on sites such as Booking.com and Agoda.com. A great alternative is Airbnb, where you can book short-term apartment rental and experience living like a local. This is a great option if you are planning to travel in a group or have the space to cook and enjoy some privacy. For budget travelers, you can find cheap hostels on Hostelworld.com for as low as $5 per night (you can get a clean and big room for that price in Egypt!). Budget on a per-night basis or for the overall trip when it comes to lodging.
Even if you don’t know how long you’ll be at each destination, you can work out a daily cost based on room rates and meal costs. For meals, expect to budget more if you are staying in a hotel and eating out for every meal. Budget for groceries if you plan to stay in a hostel or apartment with a kitchen. To get an estimate of transportation costs, learn how to get from one city to another, how long it will take, and how much each leg will cost.
If you are planning to rent a car, Discover Cars is my go-to website to book the cheapest car rental around the world. Busbud is a great booking site to check costs of buses in worldwide destinations. For rail information, you can also get information and prices of train journeys on Seat61.com for destinations worldwide. If you’re traveling in Europe, we recommend getting rail passes on Eurail to save some money.
BudgetYourTrip.com has a useful list of average travel costs in a number of destinations around the world.
3. Don’t forget to include expenditures on visas, travel insurance and vaccinations.
Next comes the basic essentials for each major trip. If you are traveling for an extended period of time, now might be a good time to decide your rough itinerary in order to estimate the rough cost of visas and vaccinations.
Many travelers dismiss travel insurance as an unnecessary expense and waste of money. They couldn’t be more wrong. Insurance is not a luxury item, it is essential even for a one-week trip and especially so for active travelers who engage in extreme sports or visit unusual destinations.
I personally have an annual travel insurance policy with Travel Guard. They offer great value and cover worldwide destinations. I’ve made a claim before and the compensation was great and the whole process was fast and easy. If you’re an active traveler like me, you can even get an adventure insurance plan to cover high risk activities like white water rafting and horse riding. World Nomads Travel Insurance> are a well respected company that allow you to buy a policy when you are already traveling. Their policies are comprehensive and include baggage and cancellation.
As for visas, find out if you need one from your own country’s foreign office website or on “Do I Need A Visa For?”. It can be quite expensive and tricky if you are planning to travel to a few countries in a region with lots of bureaucracy. If you want to avoid the stress, opt for the services of a private visa agency, such as VisaHQ, to help you expedite the visa application process for a small fee.
Consulting your doctor is the best way to find out which vaccinations you should get and how much they cost. A great resource for health and specifically vaccine information is The Adventure Doc’s vaccination page.
4. Identify your priorities.
The most important rule for your travel budget is flexibility. Be strict with your expenditure to make sure you won’t run out of money halfway or return home to a huge credit card bill, but allowing for on-the-road splurges will take the stress out of your trip. The worst budget is a chain at your leg pulling you away from the best (if slightly more expensive) travel experiences. What would a trip to New Zealand be without trying the famous bungee jump? A little planning at the start of the trip will save penny pinching, grouchy haggling and worrying about being ripped off at the cost of enjoying your trip.
Deciding what your priorities are will help you decide how you want to spend your money. Would you rather spend money on scuba diving or on a nice hotel room? Do you want to eat meals at a fancy restaurant or enjoy street food? Would you prefer to go on a three-day trek into the mountains, or splurge on a helicopter ride? Do you prefer to keep your cash for souvenirs or experiences?
For our volunteering trip in Tanzania, we had a very tight budget and had to choose between climbing Kilimanjaro or going on a wildlife safari in Serengeti. We chose the latter and had no regrets. During our six-month South America trip, we saved as much as we could by staying in hostels and eating cheaply, and we ended up having enough in our budget to include the Galapagos Islands on our itinerary!
Remember to put aside a little bit of money for emergencies. This will protect the rest of your travel budget if you need to replace a ticket that you lost or pay for an emergency at the hospital. It’s always good to have some money left when you get home as well.
5. Start saving for the trip as early as possible.
Once you’ve worked out how much you need, then you’ve got a figure you can save towards. Some people make this number their screensaver or put it on their fridge using this saving goal as motivation to go to work everyday. Saving for travel isn’t easy, but as long as you follow through and stick to your plans, you’ll get there in no time.
Practical Tips to Help You Save Money for Travel
• Create a spreadsheet, and start tracking every item you purchase or every payment you make. Do this for about a month to get an idea of where your money is spent. You can then consciously decide how you need to change your spending habits.
• Try budgeting and expense tracking tools like Pear Budget or Mint that will suggest ways to cut your expenses and help you count down towards your goal. The latter includes countdown functions for your savings and can suggest ways to cut your expenses. If you don’t hit your saving goal, then it might be time to go back and re-visit the budget.
• Do some research to find a high-interest savings account. Many banks offer free checking and savings accounts without monthly fees.
• Prioritize your expenses and give up unnecessary items. Use the library for books and DVDs. The next time you want to buy something, ask yourself if you really need it. When you do need to buy certain items, try to buy them used.
• Go through your closet, garage, and storage to find items you no longer use. Have a garage sale or sell them online at Amazon, eBay or craigslist. Selling your unwanted things can boost your savings dramatically.
• Change your lifestyle by cooking at home more often. Invite friends over instead of eating at restaurants. Visit places that offer free admission, such as museums or art galleries.
Keep in mind that how much you save will determine how long and how far you can travel. The more you have in your savings, the further you can go.