Travel Budgeting Made Easy

It’s the return of travel. Here’s how to create a travel budget for your dream vacation in 7 simple steps.

Written by Kristen Kuchar / March 14, 2022

Quick Bites

  • The average U.S. household planned to spend $2,122 on a summer vacation in 2021.
  • Determining your destination is the first step in creating your travel budget because it has the biggest impact on cost.
  • The most common trip expenses to budget for are airfare, baggage, car rentals, gas and transportation, accommodations, meals, shopping and entertainment.
  • Creating an extra fund for unexpected expenses is smart.
  • Flexibility—as far as when and where you go—is a key factor when it comes to saving money.

Whether you’re planning for an exotic adventure, relaxing on a beach or sightseeing in a new city, it’s important to create a travel budget. You’ll know exactly what you can afford and all the fun activities you can take part in, without ending up in debt when you get home.

The average U.S. household plans to spend $2,122 on a vacation, but there are many variables that can impact the price tag.[1] How long are you staying? Are you opting for budget hotels or five-star accommodations? Is the trip filled with dining out, tickets to shows and pricey attractions?

Follow these steps for creating a budget that covers everything from airfare to meals, so you can fund a getaway that suits your wallet and your vacation dreams.

Inside this article

  1. Step 1: Your destination
  2. Step 2: Your expenses
  3. Step 3: Saving
  4. Step 4: Estimate costs
  5. Step 5: Incidentals
  6. Step 6: Create your budget
  7. Step 7: The unexpected

Step 1: Determine your destination

The first step in making a travel budget is determining where you want to go so you can estimate costs.

Your destination will impact all your expenses—the price of a plane ticket, how much an average meal costs, the price tag on a hotel room, etc. For instance, a trip to Hawaii is going to cost significantly more than a trip to Mexico.[2]

Step 2: Make a list of your expected expenses

Once you have determined the location, you’ll have a good idea of what expenses you’re going to have and what you can leave off your list. A road trip with camping isn’t going to have the same list of expenses as flying to a major city.

Kristin Larsen, creator of the travel blog Believe in a Budget, says the best way to be financially prepared for a vacation is to plan as much as possible.

“Start by making a list of expenses with the basics, such as accommodations, meals, fun money and cost of travel,” Larsen suggests.

Here are some of the most common items you may need to budget for:

Transportation costs

  • Airfare

  • Airport parking and/or transportation to the airport

  • Baggage fees

  • Car rental

  • Additional car rental costs (car insurance, GPS, child safety seat, ski holders)

  • Gas

  • Tolls

  • Parking

  • Pre-road trip car maintenance and emergency car equipment

  • Transportation costs at your destination to get around (public transportation, rideshare or taxis)

Lodging and meal costs

  • Lodging (hotel, vacation rental, resort, campground)

  • Additional hotel/lodging fees (parking, Wi-Fi, resort fees or paying extra for pets)

  • Food and drink, including all meals, snacks, coffee and other beverages

  • Entertainment (tickets to sporting events or concerts; admission to museums or attractions; activities; and gear rentals, such as a bike or skis)

Other costs

  • Travel insurance

  • Additional cell phone data or an international plan for traveling abroad

  • Items you may need to purchase specifically for your trip (sunscreen, luggage, outlet converter for abroad, portable phone charger, specific clothing, camping or outdoor gear)

  • Extra costs of being away, such as a pet or home sitter

  • Travel vaccines, if traveling to an area where they’re needed

  • Tips

  • Souvenirs or gifts

Step 3: Focus on saving

The more money you can save ahead of time for a vacation, the better, says Larsen. “Whether you’re using a credit card to pay for the trip or a debit card, you should pay off your vacation immediately,” she adds.

You could even open a separate bank account that is strictly meant for vacation. “If you already have a general idea of how much your vacation will be ahead of time, start contributing to this fund with every paycheck,” says Larsen. You could fund your vacation account faster by working a side hustle or contributing any bonus income or tax returns to the account.

Step 4: Estimate the cost for each expense

Now that you have your list of expenses, estimate the costs associated with each one. Here are some tips to follow:


The price of a plane ticket depends greatly on the destination, the airline and when you’re traveling. The average cost of a round-trip domestic flight is approximately $300; and for international travel, a round-trip flight costs $750 on average.[3, 4]

According to Matthew Kepnes, founder of the travel blog Nomadic Matt and author of How to Travel the World on $50 a Day, being flexible with your dates and destination can help lower your costs.

“For example, if you’re 100% set on going to Paris in July,” says Kepnes, “you’ll have to pay whatever the airlines want. However, if you can go anywhere in Europe in July instead, you’ll be able to find all kinds of deals.”

Walk through the process of booking airfare to get a ballpark of what it will cost. To get an estimate of your airfare, search various airlines’ websites, use sites like Expedia that pull from many airlines or search on Google.

Baggage and other air travel costs

Of course, the plane ticket alone isn’t the only cost when you travel by air. The price of checking a bag varies by airline and destination.

For example, Delta charges $30 for your first bag and $40 for a second bag for a domestic flight.[5] Once you know the airline you are flying with, you can figure out how much your baggage will cost ahead of time and budget for it.

Don’t forget the cost of getting to the airport or parking. Airport parking varies depending on the type of lot. Parking at Phoenix International Airport, for example, costs between $12 and $27 per day.[6] Some airports charge less if you pay in advance.

Car rentals

The cost of a car rental varies depending on the specific car rental company, the location, car type, the length of your rental, if you’re returning to the same location, the cost of rental insurance and any add-ons you opt for. These can include things like satellite radio, GPS navigation, a child seat, mobile Wi-Fi and ski storage.

Prices for renting a Budget economy car for a week in Chicago start at $500, whereas a premium SUV is more than $1,600. Adding on rental insurance and roadside assistance can cost an additional $60 or more per day.

Tip: There are often discounts on car rentals and hotels for various affiliations, including for those who are in the military, students, college alumni and senior citizens. The company you work for could also provide discounts.

Gas and transportation

If your trip involves driving, you’ll need to factor in the cost of gas, parking and tolls. The national average for gas is around $4.31 per gallon[7]. The U.S. Department of Energy has a trip calculator that offers an estimated cost of gas based on your vehicle and route.

Hotels and lodging

Hotels, motels, hostels, camping, resorts or renting a home—there are many options when it comes to lodging, and prices vary greatly. Do a search for hotels or other lodging options to find out the average price at your destination. The average daily rate for a U.S. hotel was $90.92, but there’s a wide range of prices depending on when you travel, your location and pandemic concerns.[8]

Keep in mind when comparing hotel costs that the cheapest price may not always save you the most. Consider other factors such as money-saving perks including complimentary bikes or a free airport shuttle.

You’ll also want to know about any additional fees a hotel may charge when you’re choosing a place and preparing your budget. Fees can include parking, an extra fee if you’re bringing your dog, a resort fee, costs for Wi-Fi, an early or late check-out fee and more.

Food and drink

The cost of food and drink while traveling is going to be different for everyone. The destination, your eating habits, whether you’re opting for high-end restaurants or fast food all influence your final end total. To get an estimate, check out Yelp and Google to see what food options will be available at your destination and estimate the cost of a meal.

Entertainment and shopping

Once you have researched your destination, you’ll probably have a good idea of the places you want to see and things you’d like to do. If you’re looking to visit particular attractions or museums or attend an event, simply visit the website to see the cost of admission (and to find out if there are discount days).

Tip: When determining your food cost, consider whether or not your hotel offers free coffee and breakfast in the morning.

Step 5: Make sure your budget allows for insurance and incidentals

Beyond the main travel expenses for a trip, there are other expenses to account for, such as:

A cell phone

If you’re traveling domestically, you may want to consider increasing your data plan so you don’t go over and get slammed with a fee (especially if you’re using your GPS for a road trip or navigating around a city).

International travel requires making some cell phone plans in advance, too. AT&T, for example, has an International Day Pass with unlimited high-speed data, talk and text for $10 per day.

International travel

Besides updating your cell service, there are a few other things to keep in mind when traveling internationally.

If you’re using a credit card when abroad, confirm that it’s one that doesn’t have a foreign transaction fee. You’ll also want to alert your credit card company that you’re traveling, so they don’t confuse a purchase with fraud and freeze your card.

When exchanging cash, Kepnes recommends avoiding the airport or stores that offer currency exchange services. “You’ll get the worst rates at these places. Instead, get currency from your bank before you go, or at a bank when you arrive. That will get you the best rate,” he says.

Travel insurance

Something you may need to budget for is travel insurance. According to Meghan Walch, product manager for travel insurance company InsureMyTrip, when determining costs, rates are based on four main factors: age, number of travelers and the length and cost of the trip.

“In general, you can expect a plan to cost anywhere from 4% to 10% of your total, prepaid, nonrefundable trip cost,“ says Walch.

Walch says travelers may want to consider travel insurance if they are worried about the cost of a trip, possible illness or injury to themselves or a loved one (before or during a trip) and potential weather-related cancellations or interruptions.

“Another reason to consider a travel insurance policy is if a trip includes prepaid, nonrefundable home and car rentals, or tickets to an event,” she says. “If these costs are added into the total prepaid cost of the trip, a comprehensive travel insurance plan could protect you if your trip should be canceled or interrupted.”

Walch adds that if traveling abroad, purchasing travel medical insurance may be a good idea. Most domestic health insurance policies (including Medicare and Medicaid) will not cover you when you are traveling abroad.

Kepnes, for one, never leaves home without travel insurance. “Injuries can cost thousands of dollars overseas, and medical evacuations can cost upwards of $200,000,” he says.

Tip: Your credit card may offer some sort of travel protection, such as covering the cost of delayed or lost luggage.

Step 6: Create your travel budget

Creating your actual budget is easy thanks to the planning you did for your trip already, says Larsen. “Oftentimes a simple spreadsheet works best to list expenses,” she adds.

There are many budgeting apps that allow you to create and track your budget right from your phone. Mint, PocketGuard and TrabeePocket are just a few.

“For road trips, apps like Google Maps or Driversnote give you an overview of your total mileage, helping you determine how many tanks of gas you’ll need for an entire trip,” says Larsen.

Tip: Tracking expenses while on vacation might be the last thing on your mind , but it can be a good tactic to help you stay on budget. “Using one credit card or bank account, with the accompanying banking app, can provide easy access to log in and review all daily spending in one place,” says Kristin Larsen, creator of Believe in a Budget. If using cash, travelers can use the Notes or OneNote app to track expenses.

As you’re planning your trip, you can go back and readjust any costs—say, you find a great concert you want to check out while you’re there that’ll cost more. You might have to forgo something else to balance your travel, though.

Step 7: Account for the unexpected

Kepnes always tells people to overbudget. Why? So they have room for serendipity. “They’ll discover an amazing restaurant or festival or activity they’d love to try, but they didn’t plan for it so now they can’t afford it—even though it’s a once-in-a-lifetime opportunity,” he laments.

If you think you’ll need $2,000 for your trip, he recommends bringing $2,200 or even $2,500 instead. “That way, you have some padding if you stumble into something awesome and unexpected,” he says.

Larsen recommends including an extra 10% in your travel budget. “From taking extra Uber rides to parking at the airport to purchasing a sweatshirt because the weather is colder than you expected, all this can lead to additional expenses,” she says. That’s why she recommends creating an extra fund or buffer, so you don’t end up in debt when you get home.

Article Sources
  1. “Vacation Confidence Index 2021,” Allianz Travel,
  2. “Most expensive (and cheapest) holiday destinations in the world,” Hoppa,
  3. “Second Quarter 2021 Air Fare Increases As Passenger Numbers Increase Significantly,” United States Department of Transportation,
  4. “Consumer Airfare Index Report,” Hopper,
  5. “Baggage & Travel Fees,” Delta Airlines,
  6. “Parking,” Phoenix International Airport,
  7. “Gas Prices,” AAA,
  8. “Monthly average daily rate of U.S. hotels 2011-2020,” Statista,

About the Author

Kristen Kuchar

Kristen Kuchar

Kristen Kuchar is a journalist, covering money, travel and the beverage industry. Kristen has previously contributed personal finance and business content to, Money Under 30, The Simple Dollar, Saving for College, Credible, The Brad’s Deals Blog, Outdoor Business Magazine and more.

Full bio

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