How Much Should I Budget for Vacation and Travel?

I just had the chance to go on an incredible 12-day trip with my family to the Canadian Rockies, the Calgary Stampede, Glacier National Park, and Silverwood Theme Park. Yes, we saved Silverwood till the end, just to give my kids a little incentive to stay with it. In 2022, we were able to spend 2 weeks visiting all of the national parks in Utah and Colorado. We all still look back on this trip with fond memories and pictures to reflect on.  

I don’t say this to gloat or toot my own horn. God has blessed me in many ways. However, I am here to say that travel with a busy family on a budget is possible and very achievable. 

Those that know me know that I enjoy trip planning(to an extent). Some go as far to say as I should add travel planning to our list of firm services or change my title to Financial and Travel Planner. Maybe someday.  

At any rate, budgeting for a vacation, or any travel for that matter is a function of detailed up front planning as well as planning for the unexpected. In this post, we’ll discuss how to budget for travel costs, how to evaluate our potential travel plans, and what to do about the inevitable issue of going over budget.   

What A Vacation Shouldn’t Be

First off, I think it’s helpful to first define what successful trip planning is not. I’ve never heard anyone want to go back to on a trip that they hated. A bad trip is one that creates future personal and financial regret. Whether it’s the unexpected expenses that pushed it over budget, or the lack of planning that made that excursion double the price, it’s never fun looking back on a trip that saw vacation costs balloon out of control.  

Second, a good vacation is something you should never have to go into debt for. I’m not talking about putting the money on a credit card and then paying it off(hello points), but actually borrowing money you don’t have to pay for a trip that you want. This could be the “fun vacation loan” your local credit union is running, or even worse, not paying off the credit card that you put everything on(goodbye points). A vacation is a discretionary expense, meaning that you can choose if you pay the expense. And if you have the choice, just say no to going into debt for a vacation.  

Last and most important, vacation should never be funded from money that should be going towards long-term financial goals. Taking the $500 normally going to your Roth IRA and putting it towards Tahiti 2027 is simply not a wise financial decision. Furthermore, if you are already playing catch up in contributing towards retirement or getting out of debt, it might make sense to delay your next trip until you’ve successfully covered your travel expenses without sacrificing your financial future.  

What A Vacation Should Be  

Now onto the positive(and more enjoyable) part of what a vacation should be. Let’s face it – if you’re reading this post, you don’t have a problem spending money on travel. So, let’s talk about why we go on vacations in the first place. We are in it for the memories. My wife loves showing me pictures that pop up on her phone from the trip we took X years ago to this day. Can’t put a price on that. Even if our budget doesn’t pencil to the penny, good memories are usually worth the cost -as long as they are good.  

Second, I believe a good vacation creates deeper connections and relationships with people. Whether it’s with kids, friends, or other extended family, the intangible benefits of connection can’t be understated. When we experience new things together, we strengthen the emotional and relational bonds that hold us together.  

Last, a good vacation can be a great way to celebrate the hard work of wise financial stewardship. Whether it’s getting out of debt or other financial milestone, there is nothing like being able to enjoy the reward of hard work and persistence. A good vacation can help to memorialize the success you’ve achieved as well as motivate you to keep up the intensity towards your next goal. As always, making sure that it is within the range of what your financial goals allow is important.  

How to Determine How Much to Spend on Vacation 

Now that we’ve covered the conceptual side, let’s dive into the meat and potatoes of how to actually start planning your vacation budget.  

As mentioned before, your vacation budget should “fit into” your existing budget without creating added financial or personal stress. Examples include moving the “dinner out once a week” line item to “Florida with Friends”. Obviously, this includes holding yourself accountable and not fudging on the dollar amounts themselves. Check out our blog post on Strategies for Effective Budgeting in 2024 for more practical tips.  

The second step to take in setting up an effective vacation budget is factoring in overages and unexpected expenses. This could include taking the fun side trip that wasn’t on TripAdvisor, higher gas prices, or the extra few coffees to help you power through the long days. Typically an extra 10-20% is a good rule of thumb to keep yourself on the conservative side of your budget. 

Third, try to keep your overall budget in line with the 50/30/20 rule. Earlier in the post we discussed keeping your travel budget in line. If we expand that out to include our overall budget, a good rule of thumb is to have 50% of your budget go to non-discretionary items(housing, utilities, transportation), 30% to discretionary, and 20% to savings(retirement, education, etc). Depending on your travel timeframe, you may decrease the amount of your discretionary income going to your vacation budget, but again, it’s never a good idea to decrease your savings to fund your vacation budget.  

Last and most importantly, praying for wisdom is a vital step in achieving success in any type of Biblical financial stewardship and planning. God delights in us, and we can be confident in knowing that he desires good gifts for those who love him just as a generous father does(Matthew 7:11). While we can’t always plan for every last detail, God knows exactly what lies ahead and desires that we ask him to lead us into the right things he has for us. James 1:5(NIV) says, “If any of you lacks wisdom, you should ask God, who gives generously to all without finding fault, and it will be given to you.”  

How to Deal With a Vacation That Goes Over Budget 

We may not want to think about it, but there will be times when your vacation budget simply goes over what you planned for. Don’t. Panic. While this is not ideal, there are many things you can do to help recoup what you are likely to or have already overspent on. Here are some ideas.  

Before You Spend 

The great thing about travel planning is you can usually select from multiple options before you decide to spend. If you haven’t yet gone overbudget and can still make adjustments before you leave, simply delaying your trip until you save more is the easiest way to make up the difference. While this involves some extra patience and sacrifice, it is the most prudent and best way to account for the overage. On the same point, it is hard to understate the power of delaying gratification for overall financial success. It may seem like outdated, old school advice, but the fact is that our own human nature always prefers instant gratification, but when we can recognize and even control these desires, our overall financial status has a much better chance of going up.  

A second, almost-as-prudent method as the first is to simply swap another item in the discretionary spending column with the vacation budget, essentially creating a wash in the overall budget. This may create a large shift in another spending area, or it can be done over time just as with the first strategy. Either way, both involve a certain level of sacrifice and prioritization of what is most important.  

If time is not on your side, or you don’t have much other wiggle room in the discretionary side of your budget, making some other sacrifices may be involved to ensure your total cost doesn’t break the budget. The best examples of this include shortening the dates of your trip, changing the times of any activities for cheaper option, looking at alternative flight times, or changing hotel/car rental accommodations to more budget-friendly options.   

If you don’t mind putting in the legwork, looking around for deals through travel websites such as going.com can be a good way to make sure you’re not overspending. While this may involve some date flexibility, you never know when a good deal might show up that is right along the same dates as your original plans.  

Make sure to also check the travel pages of any membership clubs you are a part of, like Costco or Sam’s Club. Usually these involve some type of additional perk, such as a daily resort credit, or free room/cabin upgrades.  

After You’ve Spent 

If you’ve already spent the money and/or are already on your trip, you might need to get creative. One of my family’s favorite ways to account for unexpected budget overages is to take matters into our own hands(and feet). When we were in Banff earlier this month, we were told to take the Park and Ride shuttle to and from the various places we should visit in town. It sounded good in theory until we realized that the timing of the shuttle stops are not very precise and there was also a fee to ride. Since we were pressed for time, we decided just to try walking and see if it was feasible. We found it very easy to walk to our destinations, which actually saved us time and money in the long run, not to mention getting some exercise along the way.  

One of our other destinations in Banff was to visit Lake Louise. While we stayed at Lake Louise Campground, there is still a short drive up to the lake itself. Little did we know parking was $36.75 and it fills up quickly. We looked into the shuttle, but that had already booked out 2 days earlier. Private shuttles were available but ran around $200/seat. We decided to wait and go to the visitor center to look at other options. After spending a few minutes studying some of the maps at the counter, we overheard the desk employee telling another visitor that parking actually lightens up significantly after 7pm, and the parking fees are not enforced either. We went ahead and went up later that night to find ample parking. We also walked away satisfied knowing we didn’t have to spend the money on parking for the 30 minutes we spent there(the weather was around 45, windy and rainy so our visit was brief).  

Overall, successfully budgeting for vacation and travel can be a very worthwhile exercise that pays off in many ways. On top of the monetary savings, being able to have certain plans solidified takes a lot of the guesswork(and stress) out of trying to decide every single activity when you’re away. As with all financial planning, lots of little steps in the right direction lead to successful outcomes.

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