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How to Vacation on a Budget

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There’s nothing better than leaving town with your loved ones as you explore a new city or country. But going on vacation is more expensive than it used to be. The cost of travel, housing and meals out can put a major dent in your finances. You don’t want to get to your destination and suddenly realize you don’t have enough money to enjoy your trip. This is your time to relax. You shouldn’t have to worry about every dollar you spend. Learn how to budget for your upcoming trip, so you can make the most of your time away from work.

Carefree woman resting, drinking fruit juice near the beach while on vacation.

Set a Budget Before Choosing a Location

Before you get too attached to a specific location, it’s best to come up with a set limit for how much you can afford without hurting your finances. Most domestic vacations will generally cost less than international travel. The cost varies widely based on how you get there and how you spend your time once you arrive.

Some people employ a strategy called inverse travel planning where the focus is to find the cheapest destinations that will fit your budget and plan a trip around that. This strategy can help maximize your travel budget and your time off.

Go through your finances to see how much you can spend. You shouldn’t take on debt or overdraft your account to go on a trip. Avoid draining savings that were meant for other purposes like an emergency fund, a house down payment or retirement savings. 

Set a range for how much you can spend. Be prepared to make room in your budget for emergency expenses and other unforeseen events.

You can also set a daily limit for your expenses. You’ll need to think about every purchase to make sure you have enough money for the entire trip. You can take out a set amount of cash at the start of every day to avoid going over your limit.

Choose the Best Destination

Once you have an exact figure in mind, it’s time to start allocating your funds. Research shows that most people spend about half their money just getting to their destination, which can easily be several hundred dollars or more. Airfare can be unpredictable but do your best to lock in the lowest possible rate. The prices tend to drop during the week, so avoid booking on the weekends.

If your destination is close enough, driving is a great option to help save money. Assuming you have access to a car, driving or taking a road trip is usually much cheaper than flying, especially when you factor in transportation at your destination (taxis, Ubers, rental cars, public transit, etc). Driving gives you the freedom to explore as you see fit. However, remember to take into account maintenance costs and general wear and tear if you plan to use your personal vehicle.

You’ll also need a place to stay, which will take up a significant portion of your budget. Compare the costs of hotels, short-term rentals like Airbnb and Vrbo or hostels at your destination. 

If you want to plan a vacation that lets you explore the outdoors, you may even consider car camping or finding a designated camping area to help save money on lodging costs. National parks, such as the Grand Canyon, Glacier National Park and Olympic National Park, tend to be the most affordable in the U.S. Pick a destination that suits your budget.

Plan Out Your Itinerary

Once you’ve chosen a destination, it’s time to plan out the rest of your trip. Start researching things to do so you can get a sense of how much you’ll need to spend on daily activities. Some people would rather fly by the seat of their pants on vacation. 

If you like being impulsive, try setting an overall activities budget for the duration of your trip and divide that by the number of days you’ll be staying. That will give you a ballpark figure of how much you can spend each day, even if you don’t know what activities you’ll be doing or know exactly how much it will cost.

Look at your destination on the map and plan out some of your activities. See what dining and food options they have available in the area and check review sights or online menus to get a sense of how expensive they are. Figure out how you plan on getting to and from your hotel when exploring during the day. Think about other potential issues and costs, such as finding a place to use the bathroom, tipping, Wi-Fi and anything else you might need during your stay.

Prepare for the Worst

Try to anticipate all the things that could go wrong on your trip and do your best to prevent them. Review what your health insurance will cover for out-of-network care, or what emergency services they will cover if you’re traveling internationally. If you’re traveling to an exotic location, do some research ahead of time to see if there are any dangerous wildlife, local diseases or allergens that you may encounter. 

Bring along spare medications, maps and backup communication systems to avoid the worst-case scenario. You may want to take out travel insurance to protect yourself against extra costs.

Look for Ways to Save Money

There are so many ways to save money on a vacation. It all depends on how you like to spend your time. If you book accommodations that give you access to a kitchen, going shopping at local grocery stores and cooking can save you a lot of money compared to eating out. Some hotels may charge extra for essentials like hygiene products and toiletries, so consider bringing your own.

Outdoor activities, such as local state parks and natural preserves, tend to be less expensive. Consider reaching out to local organizations and groups to help you find fun activities and gatherings without having to spend a bunch of money.

Avoid Tourist Traps

If anyone knows how to save money, it’s probably the people that already live there. Before you depart on your trip, research possible alternatives to the more established businesses and destinations. 

You might be able to save money by staying a little further away from your popular or heavily trafficked tourist areas. Bars and restaurants that cater to locals tend to be cheaper than those that market themselves to tourists. You may be able to see popular tourist destinations at a reduced cost by going during weekdays or off-seasons.

Consider a Travel Credit Card

Some credit cards are designed for travelers. These rewards credit cards come with built-in perks that help you earn points on travel expenses or save money on travel services. For example, your purchases may help you save up points that you can put towards future vacations or cash back. Other companies offer discounts on local products and services, such as rental cars, flights and restaurants. 

Read the terms and conditions before taking out a travel credit card to avoid paying hidden fees. While it may be tempting to charge more to the card to earn points or rewards, avoid spending more money than you would normally and make sure you can afford the annual fees and monthly payments. 

Taking a vacation shouldn’t be stressful, at least when it comes to spending money. Use these tips to make the most of your time with your loved ones as you explore new parts of the country. 

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