How to Budget for Family Travel and Vacations

The work-life balance is a constant struggle for Americans. In fact, according to a Glassdoor survey in 2014, the average employee “only takes half of his or her eligible vacation time/paid time off.” Why is that, do you suppose?

Vacations have been linked to reducing employees’ stress, improving productivity, and other health benefits. However, 63% of Americans are not able to cover a $500 emergency expense. That makes it a little easier to understand why people aren’t taking time off from work to relax. Let’s take a look at how to budget for a much-needed vacation, so that it doesn’t destroy your finances.

Budgets Revisited: Can You Afford a Vacation?

There are four types of budgets: survival, debt-free, financial freedom, and the retirement budget. If you are struggling to make ends meet with a survival budget, your main focus should be keeping the basic utilities paid, a roof over your head, and food on the table. Although a vacation may seem like a dream, by sticking to your budget, earning extra income, getting a higher education degree, or even becoming professionally certified, it can become closer to reality.

For all other budgets, working a vacation into your bank account is doable, but only if you plan accordingly. Take a look at your finances, see which budgeting categories you can tighten up on, and explore new ways to increase your income.

Budgeting For Your Vacation

There are a few steps to ensuring that your well-deserved vacation is not only properly planned, but goes off without a financial hitch. Here are a few of the things that have worked best for me:

1. Brainstorm

Start early. Pick a destination. Research. If you don’t know where to go, get some ideas on Instagram, Pinterest, or BootsNAll.

2. Plan For The Big Expenses

Once you select a destination, get a rough idea of the types of transportation and accommodation costs you can expect. You can search for vacation packages from Travelocity, Costco Travel, or AAA Vacations. These will help you get a general idea as to what you want from your vacation. Get a feel for how much you can expect to spend on flights, lodging, and transportation.

3. Add The Little Things

Then, fill in the blanks on your vacation budget. Think about all the other travel-related costs, such as meals, activities, and gear.

4. Calculate It

You need to see it all in one place, and be able to calculate the total expense of the vacation. You can piece it all together easily with our Vacation Budget spreadsheet:

Saving For Your Vacation

There are two ways I suggest working a vacation into your budget.

Multiple Savings Accounts: The “Envelope-style” System

When I first started budgeting, I had to get away from the concept that whatever was in the bank was what I was free to spend. To control my spending, I created multiple savings accounts (free for USAA banking members) to act as an “envelopes.” This allowed me to save individually for things like car repairs and vacations.

Using the example spreadsheet above, the cost of $4,260 split between two people would be $2,130 per person. If I wanted to book the trip in 6 months, I would have to incorporate a savings of $355 a month into my budget. I would then place that amount into my designated vacation savings account, and watch it grow.

Save Conceptually

As I got into the habit of budgeting, I no longer required several bank accounts. I have even since consolidated into one account. If you’re not quite at that disciplined stage yet, though, stick with the envelope method. It works.

If you are using Mint, my favorite feature in the Budget function is to “Start each month with the previous month’s leftover amount.” This lets you conceptualize your savings by allocating a certain amount in your budget which grows each month it is unused.

If I allocate $150 per month, it would take about 14 months to save enough to afford that trip.

Either way you choose, you will have to find a way to stash away that amount per month. You can do so by making more with a side hustle, or pulling from other budgeting categories.

Budgeting During Your Vacation

Prepay what you can. Typical costs that are prepaid include flights, hotels and rental cars. If you use the Vacation Budget Spreadsheet, you can visualize prepaid items and the discretionary spending you’ll need to budget during your vacation.

In the spreadsheet’s example, you’ll have $650 to spend on food, activities and gas for 8 days. That’s an average of $81.25 per day.

Depending on your spending habits and destination, you may want to create a physical envelope system for your vacation. In this system, you carry all of your cash and only spend what you bring. If you are traveling abroad, you can use ATMs to save on foreign exchange fees. However, this method may not be practical if you feel that you cannot safely carry and store your cash during your trip. Use your credit cards or pull out cash as needed, but be mindful of your spending! Check your progress on your budgeting tool.

“But I’m On Vacation!”

You can enjoy your vacation and be financially responsible at the same time. Budgeting and tracking your spending may take some practice. It may even seem like a chore at first. But trust me: it’s better than coming back from your vacation with an extra $1,000 of debt because of a lack of planning.

That extra $1,000 could cost you over 6 months to pay off (if you originally saved $150 a month), which adds 6 more months before you can even start saving for your next trip! Wouldn’t you rather take a big vacation every 14 months rather than wait 20 (or more) months because you overspent?

With the Travel Budget Worksheet, and a little discipline, you can easily plan and budget for your next vacation.

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