How To Create A Travel Budget in Five Steps
How To Create A Travel Budget in Five Steps.
When travelling, we all our want our travel money to stretch as far as possible. But just how far our travel money can stretch depends on the type of holiday we´re planning.
For example, if your goal is to spend a week of luxury staying in a resort, your money concerns are more likely to be about whether you should stay in a 4 or 5* hotel and which restaurants you should dine at.
If, on the other hand, you plan to backpack for several months, then you´ll have other money concerns, the goal being trying to make your money stretch as far as possible.
Below, we discuss how to put together a travel budget covering the essentials excluding tours, nightlife, or activities.
How Much Money Will I Need?
How much money you need to save for your trip depends on many factors such as how long you´re going away and where you´re going. For those on a tight budget, as a general guide, most backpackers would tell you that it´s possible to live on £30 per day for meals and accommodation in places such as Thailand, Peru, Vietnam, Indonesia, Ecuador, Sri Lanka, Guatemala, India, and Algeria. If you´re backpacking throughout North America, Europe, or Australia, then anything over £120 is required.
The Essentials: Flights and Accommodation
Your flight and accommodation will make up more than 70% of your budget. If you already know how much money you will have for your holiday, it makes planning a lot easier. For example, if your total budget is £3,000 and you plan on travelling for ten days, you can search for hotel and flights to match your budget.
If, however, you´re in the beginning stages of your travel plans, you can start by looking at flight and hotel prices and then see how much money you will need.
Starting with hotel costs, open your internet browser and start looking at hotels on travel sites such as Thomas Cook, Kayak, Orbitz, or Priceline. Most travel sites allow you to filter your searches by star-rating. Many hotels will have discounts for mid-week stays or bookings of three nights or more. Play around with the filters and look at a half a dozen hotels just to get an idea of a median price.
Next up, look at flight prices. Again, open your internet browser and start your search on travel sites such as Thomas Cook, Kayak, Orbitz, or Priceline. Many flight aggregators allow you to filter searches based on lowest price, the number of stops, and the flight duration. If you´re flexible with dates, it is common to see that leaving a day or two earlier or later can make a world of difference to the price.
Other Cost Factors
Let´s say, again, your total budget is £3,000 and you want to travel for ten days, there are other factors you should keep in mind when drawing up your budget.
If your budget is based on a particular currency exchange rate or a specific hotel deal you saw a few weeks ago but the hotel price or currency rate changes, it can change your plans dramatically.
Another factor which many people neglect to think about is the cost of travel to and from the airports both in your home city and your destination. If you´re planning on taking a taxi, you´re looking at a minimum of four fares right there.
Keep these costs in mind and, as a general rule, always overestimate your budget by 20% to allow for additional surcharges and expenses.
Time Is Money
When booking hotels, flights, and connecting transport remember that time is money. In an attempt to save money, you may decide to book a hotel further out of the city, however, if it means you spend more time travelling and less time experiencing the destination, then it may not be the best option.
Additionally, when booking flights, it may be tempting to book the cheapest flight possible, however, if the flight has multiple connections and takes longer in duration, you could be cutting your trip short.
Likewise, if you´re short on time and you spend several hours on buses instead of a single train or taxi, it is worth reconsidering the real cost.
Lastly, be careful not to book connecting flights or transport too closely together. In the event, one of your flights is delayed, it can throw off the rest of your trip and may result in spending more money booking a last-minute replacement flight.
Eating Out vs Grocery Stores
A sensible general rule to follow is to balance your meals between buying food from grocery stores and restaurants. If your hotel includes breakfast, you can save a lot of money.
Again, when booking hotels, it may be cheaper in the end to book a slightly more expensive hotel if it includes breakfast, unless of course, you know you can find breakfast cheaper and just as conveniently.
Many people find that buying dinner or lunch out, but not both, is a big cost saver.
Putting It All Together
With your rough estimates of hotels and flights and daily food expenses (remember to overestimate!), open an Excel document, and enter the data.
With this document, you can see how much money you will need and where you can either cut costs, or where you have room to spare. Once these budget essentials are in place, you can then explore other parts of your travel plans such as tours and activities.
Even after budgeting, if you find yourself in need of a little help to make things happen, we´re here to help. At Ferratum Money, our goal is to inspire and enable people to say life to yes more often. Learn more here.
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