How to Budget for Vacation — 11 Easy Steps

Planning for your next trip? Check out Benzinga’s 11 steps on how to budget for a vacation can help you save more and get amazing experiences for less.

Vacation planning can be fun and stressful. Dreaming about your favorite locations or imagining a week away can get you into a feel-good vacation mood. But when you find that your dream vacation costs double what you imagined, you need other options. You don't have to give up on a vacation. The 11 steps below are more than a budget how-to — they provide a roadmap to plan for any vacation budget so you can take the vacation of your dreams. Learn how to budget for a vacation with the steps below, and you'll be lounging on the beach or gazing at the cityscape before you know it.

How to Budget for a Vacation in 11 Steps

Vacations are personal. What sounds like an amazing vacation to one person may seem like a bore to another. Fortunately, with the steps below, you'll get everything you need, from money-saving inspiration to the best budgeting apps. You can save more while planning amazing vacations that your family will remember fondly for years. 

1. Choose Your Top Destinations

List your top vacation destinations for the next year or more. These can include everything from the local beach or visiting family to a big trip to Europe, flying to Fiji to swim with whales or taking a safari in Africa. Think of the places you and your family would like to go that offer the experiences you're craving, whether that's a hammock on the beach or the top of a mountain. 

If you don't have a specific destination in mind, that can be better at this stage. For example, you could decide you want a beach destination, but whether that's Mexico or the Dominican Republic doesn't matter. In that case, the next steps become more important: finding great deals. Make a list that suits your family, whether that's super-specific or more general, like one trip to (insert location) to visit family and one trip to a beach destination. 

2. Search for Cheap Flights

There are two ways to do this, based on whether your dates are set or you have flexibility. If you have specific dates you can travel on, you can use the Google Explore feature to find affordable flights when you can travel. Set your home airport and look on the map to see what is available. If you want to visit a beach on those dates, check out destinations across Mexico, the Caribbean, California or Florida. Sometimes, you'll find amazing deals somewhere further, like the Azores or Bermuda. 

After you get an idea of which destinations have the best deals for your dates, you can also check less popular booking sites like Going, Vayama and CheapOair. To some destinations, they offer even better rates than what you'll see on Google Flights. 

If your dates are flexible, major flight search sites, including Google Flights, Hopper and AirfareWatchDog, allow you to easily set flight alerts for certain destinations. You can set up alerts for your top destination or multiple destinations. 

For example, with a flight alert, you might find a roundtrip ticket from New York to Bermuda in August for $200. With flexibility and flight alerts, you could save hundreds of dollars. However, at this stage, you need to know how much you can expect to spend on a flight to certain destinations to build your vacation plan and budget. 

3. Consider Alternative Accommodation

After flights, housing will be one of your biggest travel expenses. There are several ways to pay for this:

• Budget for it and pay whatever you need to for a hotel or Airbnb
• Stay with family or friends
• Join a house swap
• Consider house sitting
• Try low-cost options like hostels

At this stage, you need to set your budget, so you'll want to search for options. If you choose a free or low-cost option like staying with family and friends or house swapping, you might only need to budget for a gift for your hosts. But if you plan to stay in a hotel or Airbnb, check out prices at your target destination to get an idea of how much you'll need to spend.

4. Budget for Food

For a food budget, you'll want to look at costs at your destination and decide on a realistic strategy. Are you planning to eat out for every meal? If so, look for average restaurant costs at your destination. 

On the other hand, if you only eat out once a day, you could save significantly. In that case, will you have a kitchen or rely on ready-made foods or items you can pick up at a grocery store? Depending on costs at the destination, if you plan to cook at home or make simple meals like sandwiches and salads, you might not need to budget much more than you spend at home. 

5. Consider Transportation

How will you get around once you're there? Does the resort or destination include an airport transfer?

If you're traveling to a city or location with good public transportation, skip the rental car, which can cost upward of $50 a day and over $100 in certain high-demand destinations. Instead, get to know locals while you use buses, trains, trams, subways or rent bikes. If you need to get somewhere quickly, you can take an Uber or taxi, but it will cost you more. 

Many major cities have implemented low-cost bike rental systems in addition to standard public transportation options. You can rent a bike for an hour to 24 hours or longer. In bike-friendly cities, this is a great way to tour your destination while saving on transportation. Check out public transportation prices and include them in your budget.

If you plan to rent a car, research rental car prices, including necessary insurance.

6. Research Activities

Activities at your destination are the next major expense. For the sake of this travel budget, this includes two main categories:

• Activities that require tickets (like museums and theaters)
• Outdoor activities

Look for city-wide or multi-day passes for indoor activities like museums or theaters. Many major cities have museum passes that cost less than individual entry tickets. Some cities, including New York, Chicago and Barcelona, give you a pass to all or some museums and major attractions, including a pass to skip long lines. 

In addition, you can find city-specific sites or places to pick up inexpensive last-minute theater or event tickets. You'll get the full experience of less. For the budget's sake, add the full price you see online for any passes you plan to buy.

For outdoor activities, see if it's a major budget line item. Planning a full-day river rafting trip? That could cost you significantly per person. On the other hand, renting kayaks or paddle boards for an hour will usually only cost $10 to $20 in many locations.  

Most cities offer a variety of free activities throughout the year, from Shakespeare in the Park or summer concerts to free museum days or children's fairs. Check local websites at your destination for free events and activities and consider whether you want to schedule your trip around certain events. You can also take advantage of discounts or free days by searching for activities ahead of time. 

7. Create a Travel Budget 

And the moment has come. With your information in hand, it's time to build a realistic travel budget. Items to include in the budget are:

• Transportation to the airport or airport parking
• Flights (or gas, tolls and food if you plan to drive)
• Transportation at the destination
• Accommodation 
• Food
• Activities
• Extras (a splurge budget that can cover unexpected emergencies)

For example, a budget for a Dallas-based couple traveling to the Dominican Republic for a week (6 nights) might look like this:

• Airport parking: $30
• Flights: $700 ($350 each, roundtrip)
• Transportation at the destination: $150 (taxis only)
• Accommodations (all-inclusive): $1,200
• Food: $0
• Activities: $200 (1 to 2 special activities)
• Extras (a splurge budget that can cover unexpected emergencies): $150

Total DR budget: $2,430

What Is A Realistic Budget for a Vacation? 

Your budget needs depend on where you go, where you live and what you want to do while you're there. If you live in Phoenix and drive to Lake Tahoe to stay in a friend's vacation home, you might only have the cost of gas and activities at the lake for your vacation budget. On the other hand, if you fly and pay for hotels, rental cars and exclusive experiences, your budget could increase exponentially. 

For example, the average cost of an African safari is $350 to $1,500 per person per night. For a family of four traveling from New York, an African safari could cost $8,400 for six nights, plus $4,000 or more in airfare, bringing the vacation budget up to $12,400, or up to $30,000-plus. 

You can have an amazing vacation on almost any budget — even if you don't have a friend with a vacation home.

8. Track Expenses

Now it's time to decide how much you need to save. If the example couple wants to take the Dominican Republic trip in six months, they will need to save about $405 a month for six months.

If you don't keep a monthly budget, the first step to saving more is to track expenses. Once you know where your money is going, you can cut expenses. Consider using an expense tracker or a budgeting app to make it easier. 

9. Save

The next step is to see where you can stop spending money. Can you cut down on eating out or skip an expensive activity? In some cases, you may already have the money in your budget, and it's just a matter of automating transfers from your salary into a vacation savings account. 

Not sure how to hit the budget you've set? Learn more about creating a household budget or get tips on how to save money fast and how to save even on a low income. Many experts recommend the 50-30-20 budgeting technique. In that case, you'll look at your total after-tax income and allocate 50% toward necessary expenses, 30% toward wants like a vacation and 20% of your money goes toward saving and investing. 

For example, suppose you and your spouse make $12,000 combined each month after taxes. Under the 50-30-20 principle, you'd use $6,000 for necessary expenses, put $2,400 in long-term savings and investments and decide what to do with the remaining $3,600. This includes eating out and other activities at home, plus saving for vacations or special purchases. 

The specifics of how this works vary from family to family, but it's a good general guide to start thinking about your budget and how to save more for both short and long-term goals.  

10. Optimize Credit Card Bonuses

One way to save more or have extra in your vacation budget is to use credit card rewards. When you sign up for certain travel credit cards and meet a minimum spend, you can earn points worth $500 to $800+ for premium cards that you can use for flights, accommodations or experiences. 

When you use the credit card issuer's booking portal, you can make those points go even further. Some travel rewards credit cards come with additional perks that can save costs while making your trip more fun. 

In addition to the points, common perks to look for include:

• Free hotel room upgrades
• Free breakfast at certain hotels
• Free airport lounge access
• Reimbursement for TSA Precheck costs
• A free annual companion pass for a second airline ticket

You can choose from many excellent credit cards. To help you find the best options, Benzinga rounded up the best cards to save on your next trip by category. 

Here are the top options:

• Best airline credit cards
• Best credit cards for travel
• Best credit cards with no foreign transaction fees
• Best credit cards for rewards
• Best credit cards for travel insurance

11. Finalize Your Plans

Once you've set your budget and made a savings plan, it's time to look at what bookings you can lock in right away. Depending on your budget and savings, booking flights early (or when you get an alert for a great deal) can help you save more. 

As long as you start building your budget and planning with enough time, you can start saving and plan to book once there's money in the bank. Enjoy hitting savings milestones and looking forward to your big vacation.

Final Tips on Budgeting for a Vacation

Budgeting for a vacation can be part of the fun. You can explore activities at exciting destinations and dream about your next trip. With careful planning and the 50-30-20 principle, building a vacation budget while reaching long-term savings goals is doable. 

Planning a vacation budget can help you maximize savings without cutting amazing experiences. You can track your progress towards the next vacation while researching hidden or off-the-beaten-track experiences at the destination. You can share the plan with your family or friends and have fun dreaming up plans together. Find more tips to save money for travel here.