Budgeting your Dream Vacation: How do you Financially Prepare for a Trip?

Everyone desires a nice, long holiday once in a while. It’s important to kick back and relax. However, in the quest of doing this, you wouldn’t want to hurt your bank account or go under debt. Eating up your savings just for a few days of fun isn’t the right thing to do. Everyone’s idea of a dream trip is different. For some, it may be visiting the Eiffel Tower while for someone else, it may be basking on the white sand beaches of Maldives. No matter what your dream holiday is, a little planning goes a long way. Travelling out of the country is no joke. It’s a huge expense even if you’re considering a country in Asia. The good news is that you can still go on a holiday and have a good time. How? By planning ahead!

Recently, my husband and I went to the US for a good one month. Just when we started planning, we realised that this would be an expensive holiday. From the beginning, both of us were clear that we have a budget and we need to stick to it.

I’m going to be tackling this blog in two parts – The first part will include how you can save for your dream trip while the second part will include how you can stay within your budget when you’re on a holiday.

Financial Planning & Saving for your Dream Trip

Start by allocating a travel fund. Whether you’re a solo traveller or a couple, you need to work to make your vacation savings fund grow. For example, if you want to visit London next year, you need to start saving now. A good practice would be to calculate the number of months left until your trip. Divide the total amount you need by the number of months left. This will give you a rough idea of how much money you should be saving every month.

Here's how to save for travel fund:

• Cut down extra expenses: Throughout the month we all have various expenses to take care of. While some are mandatory, some are optional. A good idea to save would be restricting yourself as far as optional expenses are concerned. For example, purchasing the latest smartphone can wait or you can ditch going to a concert near you, taking day trips or visiting fancy restaurants. Remember, this is temporary. Even before you make any purchase, ask yourself if you really need that particular product right now. It might seem a bit silly at that moment but remember it will all be worthwhile.
• Work overtime: Ask your boss at work if you could put in extra hours. Your boss and your travel fund will love you.
• Contribute every month: When you have a travel fund, a basic bookkeeping exercise will go a long way. Strictly monitor your income and expenses. Once you know the amount of money required for the trip, create a fixed goal. Save a certain amount of money from every pay cheque you receive every month. It could even be as little as Rs. 2,000. However, make sure you don’t get tempted to use this reserve unless it’s an emergency. The best way to keep this money aside would be a separate bank account or if you prefer cash, hide it in a drawer that you don’t open frequently. That’s what I did when I was planning my dream vacation. Before we knew it, we had collected a large sum of money. Always remember, little drops make the mighty ocean.

A little planning, self-control and avoiding impulse purchases can give you a full-fledged travel fund. To travel, you don’t need to be rich. Instead, you need to be mindful of your expenses.

Now that I’ve tackled the savings bit for your vacation, let’s move to how you can travel on a budget when you’re on a vacation.

Just because you’ve saved an X amount of money, it doesn’t mean you can go all out and spend it all. You will have to distribute the expenses evenly to make the most out of your holiday.

Sticking to a Budget on your Dream Vacation

• Research costs in advance

While you might have a rough idea of how much your trip is going to cost overall, it’s always better to get to the root of it. Do some digging into what’s available on the internet and you will be in a better position to set your financial expectations. You don’t want to be in for a rude shock once you get there. It’s a good idea to research well on your destination. Figure out hotel bookings, travel time, travel cost, airport transfers, visa and entry tickets. It’s always better to have a realistic idea of what your expenses are going to be. You can also pre-book certain experiences online if you’re getting it at a better rate.

• Consider all-inclusive options

This is a thing I always look for whenever I’m making my bookings. No matter which site you’re booking on, you will always find hotels that come with a tag “full board included”. This means that besides offering lodging facilities, they will also be taking care of your three meals. When you’re travelling on a budget, all-inclusive packages work great. Of course, they can get a bit monotonous at times but it’s better than shelling out at a swanky restaurant.

• Go in off season

Though people are travelling all-year round these days, there are a few months which are regarded as low season. Thus, if you’re flexible with your dates, you can save big. Air tickets and accommodation are usually much cheaper in the off season.

• Look for discounts

Even before you book, explore various sites for the best deals. Check if your credit/debit card gives you any travel reward points. The discounts associated with these transactions are usually quite good. The money you save there can be used for any personal expenditure such as shopping, recreation etc.

• Prioritise your expenses

When you’re on your dream holiday, you probably want to do it all. However, you will have to choose what’s more important – having an expensive meal at a French café or touring all the way up to the Eiffel Tower. When you determine what’s important to you, you will be able to distribute your expenses evenly.

• Plan for the unexpected expenditures

No matter how well you plan, there will be a few expenses that might still pop-up. Set some money aside that can be used in an emergency. By doing this, you can prevent yourself from going in debt or cutting your trip short.

Financial planning for your dream trip can sound like a daunting task. However, once you begin doing the math and start saving regularly, you can definitely TAKE THAT TRIP.

Do you have any other travel tips that do not involve breaking the bank? We’d love to know them in the comments section below.