Create A Travel Budget In 5 Steps

Create A Travel Budget In 5 Steps

When travelling, we all our want our travel money to stretch as far as possible. But just how far your travel money can stretch depends on the type of holiday you're planning.

For example, if your goal is to spend a week in a top tier luxury resort, you might be more concerned about the star rating and what restaurants you'll be dining at.

On the other hand, if you plan to backpack for several months you'll be more concerned about stretching your money as far as possible.

Keep reading to see the best method to budget for travel covering the important essentials.

How Much Money Will I Need?

The amount of cash you'll need for your trip will depend on many factors - including how long you'll be going away for, and what part of the globe you'll be travelling to.

If you're on a tight budget, as a general rule most backpackers would tell you it's possible to live on $50 a day for meals and lodging. Places like Thailand, Peru, Vietnam, Indonesia, Ecuador, India would easily fit into this category with budget friendly options throughout their regions. If you're keen on backpacking through Europe or North America then be prepared to triple that budget to $150 per day.

1) The Essentials: Flight And Accommodation

Flights and accommodations should make up more than 70% of your budget. If you already know how much money you have allotted for your trip, that makes planning a lot easier. For example, if your total budget is $5,000 and you plan on travelling for 10 days, you can search for hotel and flights to match your budget.

If however, you're in the beginning stages of your travel plans, we recommend checking out popular flight and hotel booking websites to get an idea of how much money you'll need.

Starting with hotels, check out Kayak, Lastminute, or Expedia. Most travel sites allow you to filter your search by star ratings. Many hotel chains will have discounts for mid-week stays or bookings of three nights or more. Definitely play around with different filters and look at a half dozen hotels to get an idea of pricing for your stay.

Next should be flights. Again, definitely check out Kayak or Expedia. Many of these "flight aggregators" allow you to sort your search based on lowest price, the number of stops, flight duration, and more. If you're flexible with your dates, it's not common to see that leaving a day or two earlier (or later) can make a world of difference to the price.

2) Other Cost Factors

Let's say your total budget is $5,000 and you want to travel for 10 days. There's other factors you should definitely keep in mind when drawing up your budget.

Remember to check the currency you're booking in. It's easy to think you're getting a fabulous price on a hotel, only to find you ended up paying in a local currency that is way more than you've budgeted for when converted to your local currency.

Another thing people tend to forget is travel to and from your hotel. Jumping in a cab or an Uber should be considered to and from the airport, and usually equates to a minimum of 4 fares right there.

Keep these "extra" costs in mind, and as a general rule always overestimate your budget by 20% to allow for all these additional expenses.

3) Time Is Money

Time Is Money

When you're booking hotels, flights, and the connecting transportation - remember that time is money!

In an attempt to save money, you may decide to book a hotel further out of the city to save some cash. The problem with that approach is, you'll be spending more and more time travelling and less time experiencing the destination.

Additionally, when booking your flight, it may be temping to book the absolute cheapest fair possible. However, if the flight has multiple connections and takes longer to reach your destination, you'll be cutting your trip even shorter.

The same goes with transport in the country. If you decide to spend several hours on buses instead of a single train or taxi ride, it's worth reconsidering the real cost.

As a general rule, you'll want to avoid booking connecting flights and transportation too close to one another. If anything gets delayed on your trip (such as your flight), you'll end up spending more money re-booking any last minute transportation or flights - and trust us, that can be expensive.

4) Restaurants VS The Grocery Store

We get it, you're on vacation and who wants to cook? But in the name of saving money, it's a great rule to balance eating out versus grabbing some easy food from the grocery store.

If the hotel you're staying at offers a free breakfast or snacks, that could be a potential way to save a lot of money while you're away. Again, when booking hotels it may be cheaper in the end to pay for the more expensive hotel if it offers these little perks. This can also be a great way to spend some more time at the beach if you don't have to travel off the resort, or away from your hotel to find food.

Tons of travelers recommend that buying lunch or dinner out, but not both, is a big cost saver.

5) Putting It All Together

With your rough estimates of hotels, flights, and food expenses (remember to overestimate!), open your favourite spreadsheet program like Excel and enter your numbers.

This document will help you view how much money you'll need and where you can potentially cut costs. Once your budget essentials are in place, you'll be able to explore other parts of your travel plans such as activities and excursions.

Even after budgeting, many travel experts find themselves in need of a bit of extra cash. At Ferratum, we're happy to help! Our goal is to inspire and enable people (just like you) to say YES more often. Learn more about our super smart short term loans to give you an extra push to that new part of the globe you've always wanted to visit.