My friend Alison, blogger at Tickling the Wheat, is back this week to talk about budgeting for your DREAM vacation!  Her post on creating a budget that helps you reach your goals was so good (check it out if you haven’t already!), so I was super happy when she agreed to share more of her budgeting tips and advice. My husband and I love taking vacations, and we are planning a big one this year: a trip to Mexico where my little sister is getting married!  So Alison’s advice on creating a budget for your dream vacation is timely.  Enjoy! 

Your vacation should be a time to kick back, relax, and enjoy life. But what happens when your dream vacation is just out of reach? How do you plan a budget for your dream vacation (without breaking the bank)?

Budgeting for your dream vacation doesn’t have to be complicated.

How to Create a Budget for Your Dream Vacation

Plan Your Vacation

Planning your vacation is the most exciting part (other than the actual vacation, of course)! Spend some time talking with your family to decide on possible locations. Depending on the season and the weather, think about where you’d like to go, how you’ll get there, and what activities you want to do once you’re on vacation. You’ll need to base your budget around these categories.

Once you have the basics down, you’ll need to start thinking about your budget. There are two ways to create a vacation budget: a fixed budget and a category budget.

Fixed Budget

The first way to plan your vacation budget is to set aside a designated amount of money before you even start planning. This method is perfect for planning short, relatively inexpensive vacations.

For example, every summer, my family visits my in-laws’ cabin in Northern Michigan. We plan to spend $300 or less, which we automatically set aside in our main budget. This amount will cover everything from our transportation to and from the cabin, as well as the occasional restaurant meal or activity. The majority of the vacation is spent doing free activities like swimming at a local beach or roasting marshmallows around a campfire. We bring most of our groceries from home to keep costs down. Once we’re “Up North,” we set aside the money that we’ll need for our return trip, and the rest of our vacation budget can be used for day trips like going to Mackinac Island or going canoeing down a local river. Once our spending money is gone, we stick with free activities.

If you planned your vacation based on a fixed budget, you’ll need to make sure that your planned vacation is less than your total budget. If not, try to find alternatives for some of the items in each category (like staying in a different hotel or using some of the tips below to save more on your vacation).

Category Budget

The second way to plan your budget is to estimate the cost of everything you’ll do on your vacation and total it up. This method is usually best for planning large trips, especially ones that require you to travel far from home. For example, next year, we’d like to take a trip to Disney World. We’ve already started planning our trip, and we’ll base our budget on the total cost of everything we’ll do. We’ll need to think about the cost of hotels, airfare, and park admissions, as well as food and other expenses.

If you’re creating a vacation budget based on the category method, break your vacation into categories (lodging, transportation, activities and food). Research each category, and create an itinerary. Once you have an established itinerary, add each category and total them up to create your budget.

Don’t forget to plan for the unexpected!

For both budgeting methods (fixed and category), you’ll need to set aside a little extra money for unexpected expenses. Even though your vacation is supposed to be the time of your life, you never know when you’ll get a flat tire or someone will get sick (on the first day of our last trip out of state, we ended up in an emergency room with a sick baby – not fun). By planning for the unexpected, you’ll be able to rest easy, even if things don’t go quite as planned.

• Ask about cancellation dates and fees.
• Read the fine print on your travel arrangements.
• Call ahead if you have special needs.

Plan Your Budget

Now for the less-fun part of planning your vacation…the budget. 😉 You’ll want to think about the total amount you’ll need, how you’ll reach your budget goal, and if there are any ways you can save or spend less on your vacation.

How much will you need?

Based on the answers to the category questions above (where you’ll stay, how you’ll get there, and what activities you’ll do once you’re there), you should be able to estimate the cost of your vacation. Even so, try to bring a little extra spending money.

What will it take to reach your budget goal?

Once you have your established budget, you’ll need to make sure that you are able to fund it. Try setting aside a certain amount of money each month. If your budget is small enough, like our “Up North” trip, you may be able to pay for it that month, but for larger trips, like our Disney vacation, you should try to set aside money each month. For example, we’re expecting to spend $2,500 on our Disney vacation, so we’ve been setting aside $200 every month this year.

Are there ways to save on your vacation?

Even if you’re planning the vacation of a lifetime, there are ways to make it more affordable.

• Stay with family or share the cost of your lodging. We have so much fun when we stay with my family “Up North.” The entire family (aunts, uncles, cousins, etc.) goes for a week and it’s purely chaotic (depending on the number of toddlers) fun! You could also consider sharing a hotel with friends (look into getting a suite – the hotel may even upgrade your room for free if you travel in an off-peak time) to save on costs.
• Use points to book your travel arrangements. A friend of mine was able to spend two weeks in Hawaii (for free!!!) by saving his hotel points and flight miles. It took him years to accumulate the points, but it was worth the wait. If you have a rewards credit card or travel frequently for work, consider saving the points for your dream vacation (make sure that the points don’t have an expiration date, though).
• Be flexible on your travel dates. Depending on your travel destination, “peak” travel times may differ. If you can, try to travel during the school year (September through May) and avoid traveling during holidays. Weekends (Friday and Saturday nights, especially) also tend to be more expensive. Consider travelling Tuesday – Tuesday or Sunday – Thursday, if possible.

By thoroughly planning your vacation (thinking about where you’ll stay, how you’ll get there, and what you’ll do) and creating a budget to get you there (thinking about how much money you’ll need, how you’ll save for your vacation, and how you can spend less), you’ll be well on your way to going on your dream vacation. Happy travels!

Alison Lange is a farmer’s wife and mommy of two. She is the creator of Tickling the Wheat, where she shares strategies to savor the sweet and simple things in life. She writes about parenting, finances, and everyday life to encourage women to find balance in their roles as wives, mommies, and home managers. Popular posts include: How to Speed Clean Your Way to a Happy Home and Take Control of Your Spending