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Making a travel budget isn’t always fun or exciting, but a good budget will help you manage your expenses effectively so that you can have a great trip without overstretching your wallet. I’ve written up a few tips and tricks that I use when making my travel budget that’ll help you when planning your next adventure! And after you have created your travel budget, these are my tips for sticking to it.
1. Know your destination
Budgeting for London or San Francisco is going to be a lot different than budgeting for Vietnam. It’s important to do your research and prepare yourself for what you will be spending on accommodation, transport and food. Don’t assume you can find accommodation in London for $10 per night because you did in Hanoi. Your budget needs to be tailored for each trip you take.
Tip: Research the cost of accommodation, food, transport and activities in your chosen destination. Use google, online forums, facebook groups and ask friends to get the most accurate (and realistic) information. Use multiple sources to ensure the information is accurate. Everyone has a different idea of what is cheap and what is expensive, so don’t take one person’s opinion as accurate.
2. Check the currency exchange rate
When choosing a destination and planning your budget, make sure you’re paying close attention to the currency exchange rate. You don’t want to arrive to find that your dollar is worth much less that you assumed.
When I travelled to Hawaii, the Australian dollar was 65 cents to the USD, which meant I spent much more than anticipated. If I had known this before my trip, I may have selected a different destination.
Tip: Decide beforehand if you’re budgeting in your currency or the local currency of the destination and stick with it. Mixing your currencies can lead to confusion.
3. Calculate your initial expenses
A good travel budget should have an overall budget for the total amount you want to spend on your trip and smaller budgets for individual parts. Before you even get on the plane, you can easily work out your initial expenses, which will help guide your travel budget. I would consider initial expenses to be travel insurance, flights, visas, travel backpacks and accessories and vaccinations and medicines. Calculating your initial expenses will allow you to be more realistic in your overall budget.
Tip: You can essentially calculate your initial expenses to the dollar, and can pay for most of the initial expenses upfront to help you keep on top of your travel budget. You can track your initial expenses in my Travel Budget Guide.
4. Consider major activities you want to do
If you know you want to visit Angkor Wat in Cambodia, hike Machu Picchu in Peru, scuba dive in Bali or sail around the islands of Thailand, calculate this into your initial expense.
Tip: Major activities and landmark attractions can be expensive and this is where most travellers blow their budget. If you’re daily budget is $25 dollars, but a trip to Angkor Wat is $37, that alone blows your daily budget, so by pre calculating this expense, you are more likely to stay in line with your daily budget.
5. Set a daily budget
In addition to your initial expenses, you should allow yourself a daily budget, that will cover accommodation, food, transport, activities and spending money (souvenirs and shopping).
When setting your daily budget, be realistic and upfront with yourself about how you want to travel.
Are you travelling solo? Do you prefer hotels over hostels and airbnbs? What major attractions will you be doing and visiting? Will you take a 12 hour bus ride or would you prefer to fly?
Not everyone is comfortable in hostels or Airbnbs, so if you need to account more into your budget for hotels, go for it. If you would hate to take an overnight bus, allow extra in your budget for a flight.
For me, I would be happy to stay in a $10 hostel bed if it meant I could go white water rafting or scuba diving that week. And I am more than happy to take 12 hour bus rides. I personally prefer bus rides because I get to see the countryside.
But not everyone’s the same and that’s okay. You just need to be realistic with yourself when setting your daily budget. I don’t know about you but the more I blow my budget, the more I spend. If I am able to stick to my budget, it motivates me to do so.
Tip: Set your daily budget differently for each country you plan to visit.
6. Add a contingency for unexpected expenses
It’s always a good idea to include something in your budget for anything unforeseen. It is a possibility that you might miss your flight, lose a bag or something in it, get sick or decide to participate in an activity you didn’t plan for.
Allowing for this in your budget is the safest way to ensure you come home with more and not less money than expected.
A good rule of thumb is ten percent of your daily budget, depending on the region you are travelling too.
So for example, for a three month trip through Asia, with a daily budget or $30, I would recommend a contingency budget of $270.
10% of the daily budget is $3. $3 X 90 days = $270.
If at the end of your trip you haven’t touched your contingency budget, you can splurge for the last few days or put it straight towards saving for your next trip.
Tip: Add more to your contingency budget instead of less. 10% should be the absolute minimum.
7. Add it all together – using my travel budget guide.
Now you have calculated the initial expenses, daily budget and contingency fund, put it all together to create your travel budget.
To do this, add in your initial expenses, multiply your average daily costs by the number of days you’ll be travelling and add your unexpected contingencies fund.
The result will be the total you require for your trip. Remember that it’s not an exact science and it’s only your best estimation.
If research was done properly and you were realistic, you should be able to achieve your budget.
These are my quick and easy tips for creating a travel budget. And don’t forget to check out my tips for sticking to your travel budget.
For more details about how to save for travel and create a travel budget, check out my guide to affording travel.
A complete guide to affording travel
This Guide to Affording Travel teaches you all the strategies I use to save money, create a travel budget and plan my dream trips! In this book you will learn:
- Proven strategies to help you save money fast
- Advice on assessing your budget and creating an action plan
- A 7-step guide to creating a travel budget – including a printable sheet
- Destination-specific budget advice
- Information on the best budgeting and travel resources
- The travel hacks I use to save thousands of dollars