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CHANCES ARE, YOU ALREADY HAVE A DESTINATION IN MIND FOR YOUR NEXT VACATION Statistically speaking, chances are even greater that you have not created a budget for the trip. Most travelers only create an estimated amount for the total trip cost after they decide on the destination! According to the Detroit Free Press, 68% of Americans overspend on their vacations because they fail to create a realistic budget and plan ahead for travel expenses. As your travel advisor, I want to help set you up for success!
SOME QUESTIONS TO CONSIDER WHEN CREATING YOUR TRAVEL BUDGET: What goes into deciding how much to spend? How do you decide how much to spend in each area? Most importantly, how can an effective budget keep you from blowing your budget? Continue reading to learn about our recommendations and how-tos for successfully budgeting for travel.
Before you go any further, it’s important to know how to set your overall budget. A great rule of thumb is to budget 10% of your annual income to travel. Most Americans spend anywhere from 5-15% annually on travel.
Next, consider the destination. We know that you're already daydreaming about your next trip. That’s great! You'll need to know a bit about your destination so you can properly budget for it. Your travel advisor can help you determine a realistic budget for your destination.
You’ve got the destination and your total budget. Now let’s get to the nitty gritty: how do you allocate expenses accordingly? We like to follow a basic budgeting rule called the 50/30/20 rule, but with a few modifications specific to travel so you don't become another “I overspent on vacation” statistic. We also want to encourage you to “guess high” on your numbers, to stave off any surprises later. It looks like this:
50%- Transportation and Accommodations- Half of your budget is for travel and accommodations.
25%- Food & Activities- Food = All meals, including tips, drinks, & snacks. Activities = excursions, tickets & passes.
15%- Incidentals- Tips, resort fees, baggage fees, pre-trip expenses, souvenirs
10%- Emergency fund- No one wants something terrible to happen when you’re traveling. ALWAYS get travel insurance!
By now, we hope you have a more clear picture of how to create a successful budget for your next trip. If you have any questions or are unsure about how to apply this technique to your next trip, we’re here to help! Your vacation consultation is a great time to have this discussion. We’d love to help you!
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