Creating your solo travel budget is an important part of any trip planning process. It's actually the first step and January is a great time to put your mind to it.
Travel budgeting takes research and thought, and we've got great tips and resources to help get you there.
I feel pretty capable of planning travel on just about any budget. And while I'd rather not be constrained by money, I'd also prefer to travel frugally and more, rather than luxuriously and less. I know how to plan a vacation on a tight budget. And I'm careful to plan my travels according to the money I actually have to spend so that I'm not paying for trips after the fact.
Now, for my travel budgeting and planning process that you can apply to your own upcoming trips.
Two Ways to Plan and Budget Travel
There are two basic approaches to planning and budgeting travel.
- Start with where and how you want to travel. If the where and how of your trip is really important to you (if the destination and your travel style – whether it's luxury, eating at special restaurants, taking classes, or relaxing at a resort – are not flexible), then your planning starts with how much money the trip will actually cost. Start by calculating the cost of the trip using the guidelines in the next section. If the cost exceeds your budget:
- Shift your dates to the shoulder or off-season and see whether that improves matters. Read How to Save on Shoulder Season Travel.
- If date-shifting is not possible or doesn't make enough of a difference, then you may have to wait and travel later as you save the money for the trip. Read How to Save Money for Travel for a solid how-to approach on saving cash for travel.
- Start with how much money you have to spend. If the fact that you're traveling is more important than where and how, then your planning is based on the money you actually have. Read
How to Plan and Budget Your Trip
To calculate the cost of your trip, begin with the big expenses and work down to the smaller ones.
- Transportation or Accommodation. It's a toss up. If you're taking a flight (or flights), this may be your biggest expense. But if you're taking a short flight to an expensive city, accommodation may be your big ticket item. Determine which is likely to be your biggest expense and calculate what the cost will be.
- Transportation: Cost of flights, bus, train, transfers, and car rentals, including gas and insurance. Read: How to Get the Best Deal on Flights.
- Accommodation: Determine your average nightly rate and multiply it by the number of nights you'll be there. You can read how I came in at an average nightly rate of $73.39 in Kauai even though I spent a couple of nights at a luxury resort in Budget Accommodation in Kauai: Four Ways to Stay. Also read: Save on Hotels? Yes You Can with These Tips.
- Food. What's your pleasure? This is an expense that can vary widely. If going to the restaurants of celebrity chefs is your thing, plan for it. It will be expensive and you'll likely have to book long in advance. If you're happy cooking for yourself or eating street food, your food budget will be far less. Read Travel, Eat Well, and Save on Food. With food you can decide to save sometimes (have a picnic of food from the grocery store) and splurge at other times (at a special restaurant).
- Entertainment. Buy in advance? Whether it's a kayaking day trip or attending a Broadway play, it's rare to go somewhere and not incur additional expenses for entertainment of some form. It's important to budget for these. Also note that it may be less expensive to purchase tickets before you go. Check out our posts on free and low-cost tips for many expensive destinations like London, Paris, Sydney, and New York.
- Walking-around money. You may need money for things like transit, a snack, or sun block. There are dozens of small things you'll likely buy over the course of your trip. Set a small daily contingency fund for those little extras along the way.
- Travel insurance. I believe this to be an absolute necessity. My price and benefits comparison is here: Going Alone? Travel Insurance Is a Must. If you're a senior, read Best Travel Insurance for Senior Solo Travelers.
- Souvenirs. This is not a line in my travel budget because shopping isn't my thing. But if it's yours, make sure you've calculated it as part of your budget. If you're shopping in a currency other than your own, read: Your Currency or Theirs? The Decision Makes a Difference.
- “Breaking the budget” money. Travel should be fun and it's no fun being on too tight a financial leash. The amount of your “break the budget” money will depend on how long you're traveling and your overall budget. I like to have at least 15% of my overall travel budget available for spontaneous purchases.
- Use a spreadsheet to calculate your budget. As you're putting your budget together you'll be changing your mind along the way. This is where a spreadsheet comes in handy.
When It’s Okay to Break Your Travel Budget
Money is about trade-offs. As a solo traveler, you choose the trade-offs you want to make.
Take a moment to reflect. Be aware of the stress that money decisions can cause. You may want to stay at a five-star rather than a four-star resort but that extra expense may cause you financial stress. You may want an amazing bike for your cycling trip but the fear of it being stolen may cause you unnecessary stress. Stress is a trade-off to consider when making money decisions.
Know your passions. Some people will eat on the cheap in Italy to have the money to spend on a fabulous pair of leather shoes. Others will stay at a hostel so that they can afford to eat at a Michelin Star restaurant. You can save in one area to spend in another according to what's important to you.
Good money decisions are about being aware of your financial constraints, stress, passions, and the trade-offs you're willing to make. I suggest that you consider the following.
Make or spend short of your travel budget when:
- You can get the same results/pleasure/satisfaction at a lower cost.
- You don't care about something very much.
- The expense would worry you.
Break your travel budget when:
- It feeds whatever you are passionate about in this world: food, wine, art, sports, etc.
- You're buying something tangible that you will value in the long term.
- It is giving you a unique experience in a way that is just not possible anywhere else.
Be aware of your budget as you're making your decisions. If you simply keep to your budget in some areas you will definitely find yourself over budget should you break it in others. It's important that the making and breaking of your budget is done in balance.
Travel Budgeting: Let's Consider Money and Meaning
According to happiness theory, when money is spent on travel, happiness grows over time. However, when money is spent on things, happiness tends to diminish over time. So, yes, buy travel with your money. Plan and budget your trips according to what you can afford. But don't go into debt for travel. Credit cards are tools. They are not money. So while you may pay for your trip on a credit card, pay the card off before you leave. This approach to money not only relieves painful money woes after a trip (which often negates some of its joy) but also makes the anticipation of the trip that much sweeter.
