By Wendy Rose Gould in The Knot, featuring, Julia K. Pham, CFP®, AIF®, CDFA®, Wealth Advisor
Setting up a realistic budget and learning how to stick to it.
Even thinking about the word “budget” can make you crinkle your nose and feel overwhelmed, but here’s the thing: Knowing how to budget for a vacation is actually incredibly freeing. More than that, it ensures you have an even better time while soaking up sunshine on a beach in Mexico, sipping sangria in Italy or exploring some far corner of the rainforest.
“Having a vacation budget sets guardrails in advance so you can have fun, avoid arguing about expenses on your trip, and not end up paying for it in more ways than one,” explains Heather Boneparth, part of a husband-wife team with Douglas Boneparth, authors of Money Together.
Ultimately, a budget provides clarity and direction, helping you stay within comfortable financial limits, adds Julia Pham, CFP, AIF, CDFA, a wealth advisor at Halbert Hargrove. It also makes it easier for couples to stay on the same page and helps reduce potential misunderstandings about spending priorities.
We spoke with both Pham and the Boneparths about everything you need to know about all things travel budgets, including how to plan, how to stick to your budget and how to work within a tighter budget and still have a blast.
What Should Be Included in a Vacation Budget
The first step in learning how to plan and budget for a vacation is knowing what to include from the get-go. Once you know the general types of expenses, you can create a specific spending limit for each.
Transportation
You’ve got to get to your destination, and depending on how far you’re traveling, this can make up a pretty big part of your budget. Factor in plane tickets, fuel costs, rental cars and any boats or trains. Also consider transportation once you’ve arrived, including shuttles to/from your hotel, rideshares and public transit.
Lodging
Whether you’re camping, staying at a five-star resort, Airbnb-ing it or going on a cruise, lodging must be factored into your total budget. Prices swing wildly depending on your destination and where you’re staying, but there are usually options that span across all budgets.
Food & Drinks
From that morning cuppa to fancy dinners out, food and drinks can sneakily add up. Setting a budget in advance helps you know where you can splurge and when to cut back without stressing.
Activities
The best couples’ vacations include some sort of sightseeing or excursion. Plan out a few big must-sees for your vacation, then work in less expensive options. For budget-friendly options, look into things like free museum days, low-cost tours and city passes. Setting aside a small amount for spontaneous experiences can also make the plan feel more flexible and realistic, Pham says. She adds, “Sometimes, if I’m traveling to a place where I know the shopping will be good, I will factor that into my budget, as well.”
Unexpected Costs
Of course, some expenses pop up out of nowhere, like an airline hitting you with an unexpected baggage fee or an equipment rental required during an excursion. Having a buffer for these things can ease financial tension, Boneparth says.
How to Determine Your Vacation Budget
So what’s a realistic budget for a vacation? Some wonder whether a few hundred will cover everything, while others ask whether $1,000, $2,000 or even $5,000 is enough. The answer is that it’s highly variable.
An adventurous road trip in your state is way less expensive than a 10-day romantic getaway in Europe, for example. And even the same vacation to the same destination can look different from couple to couple, depending on hotel preferences, dining reservations and beyond.
Figure Out What’s Realistic for You
Money is super personal. “You and your partner should examine your own priorities to determine how important this vacation is to you,” Boneparth says. “Is it for a certain milestone? Have you been waiting a very long time to do this one amazing thing?” She recommends coming up with a realistic budget by asking “how much money will this trip realistically cost?” and “how much money do we have to spend?”
“You need to understand your cash flow and how much of a surplus you have after paying all your expenses each month,” Boneparth says. “If you don’t have any money left over after paying your expenses, how are you planning to save money for this vacation? Are you willing to make any changes to put yourselves in a position to save up?” Or, she adds, is none of this an issue because you already have a vacation fund you’re planning to pull from?
Do Some Research
To answer the first question above, you need to do your own research so you can understand the price ranges of the largest expense buckets for the trip, including transportation, lodging, food and experiences. “Then, you can determine whether the vacation you want is even attainable,” Boneparth advises.
Adjust as Needed
Once you have a handle on how much big-ticket items cost, you can adjust your budget. Maybe it’s a drastic move like choosing a different location entirely. Or perhaps you can tweak things slightly by staying for a shorter time, going during the shoulder season, staying at lower-cost hotels or planning to prepare most of your own meals.
On the other hand, maybe you’ll realize that you actually have more money to spend than you thought. In that case, you could extend the trip a little longer, splurge on a nicer hotel, or plan a few fancy meals or excursions. The world is your oyster!
Save Up
Not sure how to save for a vacation on a budget? It’s easier than you’d think, but it does require some discipline. First, set up a dedicated “trip fund” savings account so you’re less tempted to dip into it for everyday expenses.
Second, automate small weekly transfers. You’ll be surprised how quickly it adds up. Alternatively, if you know exactly how much you need for your vacation, take the cost and divide it by however many weeks or months until you need to book the vacation. Then transfer that amount to your travel fund weekly/monthly. There are also budget apps that can help you figure out costs and save up accordingly.
Book & Pay
Once you’ve figured out your budget and have some money saved up for it, you can begin booking parts of the trip. We recommend booking transportation first, since that sets the date parameters for your lodging and any food or activity reservations. Depending on your finances, you can pay for one item at a time to help ease financial strain. Or you may choose to pay for everything at once and get it out of the way.
How to Stick to Your Vacation Budget as a Couple
Setting your vacation budget is one thing. Sticking to it is an entirely different skill set. It’s totally doable, though, and you two will feel great coming back from your vacation knowing you stuck to the parameters and still had a great time. Here’s how to budget for vacation expenses and stick to the plan.
Talk Early & Often
It’s such a cliché, but communication is essential when doing anything as a couple, including figuring out a budget and sticking to it. “Have open conversations and align expectations early,” Boneparth says. “Discuss what each of you values most for the trip and build that into your budget.”
Avoid Credit Card Debt
Be very careful when using credit cards on vacation. “When you’re outside of your home environment and typical routines, it’s easy to YOLO it and worry about the consequences later. Don’t fall into that trap,” Pham warns.
Live in the Moment
Ooph, this one hits home, but you’ve gotta put your phones away while vacationing together. This lets you live in the moment together, and it can also help with your budgeting. “A lot of the overspending we see on vacation comes from trying to project a certain lifestyle or aesthetic around your trip, rather than just enjoying the moment you’re in and the fact that you’re there together,” Pham says. “The rest of it is noise, and you’re there to get away from the noise.”
Break Things Down Into Baby Budgets
For some couples, having a daily spending limit really helps you stay on target for your total vacation spend. Boneparth says, “Breaking the budget into smaller increments can make it easier to manage.” For example, if you’re not sure how much to budget for meals on vacation, you can do some research in advance on local costs, then allocate a specific amount per day for food.
