- 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. 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
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.
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:
Airport parking and/or transportation to the airport
Additional car rental costs (car insurance, GPS, child safety seat, ski holders)
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)
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
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]
“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. 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. Some airports charge less if you pay in advance.
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.
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. 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.
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).
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.
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.
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.
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.
“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.
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.