Everybody needs a break, and taking a vacation is a great way to get away from your routine and refresh your batteries. Many families take a vacation in the summer, when the kids are out of school and the weather is fine. However, without budgeting for your trip, you could end up spending a lot more than you anticipated.
If you aren’t good at budgeting for a family vacation, no need to worry! We’re here to help.
The best way to start is by brainstorming ideas early. Plan out the details of your trip. Set limits on spending. Book early, prepay, and find bargains to keep costs down. Here are five budgeting tips to help you take control of your family vacation costs:
1. Choose a vacation destination.
Planning your vacation is part of the fun. You can return to a location that is a family favorite or choose a new and exotic location, either in the U.S. or abroad. If you start with a list of possible destinations and dates, then you can do your research and get a handle on the costs. It’s better to have a few options for both vacation destinations and travel dates.
2. Compare travel costs.
How are you planning to travel? Is it a family car trip, or are you traveling by air? Airfare can be the most expensive part of a vacation, so you want to do your homework. There are a variety of travel sites you can use to compare costs, such as Expedia, Kayak, Orbitz, Travelocity, and Hotwire, to name a few. These sites let you check different airports, dates, times, and carriers. A couple of hints about comparing airfares:
- Airfares change depending on when you book. Experts recommend booking 2-3 months in advance for the best deal.
- Be careful with cheap fares. Many have restrictions or will route you through multiple layovers before you reach your destination. If you are trying to get an idea of travel costs, don’t use the rock-bottom fares for budgeting.
- Nonrefundable tickets are truly nonrefundable. If you aren’t absolutely certain about your travel plans, then wait or pay extra so you can change the tickets at little or no cost.
- Check airfares with the airline website as well as the travel sites. Once you identify a carrier, you might get a better deal if you book directly.
3. Shop for accommodations.
Hotels or vacation rentals are another large expense. If you are looking for hotel bargains, be sure to use any discounts from organizations such as AAA or AARP. Also, book early to get the best deals. If you make a reservation, you can usually lock in the room rate and have the option to cancel if your plans change. If you are confident about your travel plans, pay in advance for the best room rates. You can also book an apartment or house if you want the freedom to cook and more space for the family. Try to use a reputable vacation rental broker. Many people use Airbnb, but be sure to read the reviews and do your research before you book.
4. Prepare in advance.
Once you have a basic idea of costs, you can determine if your vacation plans fit the household budget. Once you have your dates and destination set, you can move on to the next stage of planning:
- Create a vacation budget. You have already determined costs for the big-ticket items. Now consider additional costs such as meals, ground transportation, attractions, pet-sitters, and other expenses. Be sure to add in extra cash as a buffer.
- Prepay expenses such as airfare, hotel, car rentals, and so on. You usually can get a better rate if you prepay, and you get to pay off those expenses before you leave on your trip.
- Consider travel insurance. It may seem unnecessary, but travel insurance is inexpensive and can be a lifesaver if something happens. If you become ill and can’t travel, or your travel plans change because of a strike, natural disaster, or other unforeseen reasons, travel insurance will ensure you get your money back.
5. Start your vacation fund.
Once your budget is finalized, set up a vacation fund. Set money aside each month, and compare it to your budget to make sure you’re on track. There are different savings strategies you can use:
- Your savings account is a good place to put money away so it can earn interest.
- Consider setting up automatic transfers from your checking to your savings account for your vacation fund.
- Consider a short-term certificate of deposit (CD). A three- or six-month CD earns higher interest and can lock money away until it matures in time for your trip.
Set aside cash for the trip.
As part of your vacation budget, set a daily allowance for spending and consider whether to use cash, credit cards, or traveler’s checks to cover expenses. Some considerations for paying for incidentals while on vacation:
- A credit card is easy to use, but be sure your credit limit is enough for your upcoming expenses. If you are traveling abroad, also make sure you understand the foreign transaction fees and exchange rates for your card. Also, alert your bank or credit union before you go so it doesn’t deny your transactions, thinking the card has been stolen.
- Cash for tips, cabs, and other expenses may be necessary. Rather than carrying a lot of cash with you, be sure you can get cash where you are traveling. ATMs are everywhere, but be sure you know what transaction fees might be involved. With banks, many noncustomer withdrawals are charged twice: one fee from the ATM and another from your bank. Credit unions like iQ, on the other hand, often belong to a shared credit union co-op, so you can withdraw cash from any participating credit union without fees.
- Traveler’s checks and prepaid debit cards are useful if you don’t want to carry cash. Check with your bank or credit union to see what is available.
With advance planning and budgeting for your vacation, you don’t have to break the bank. Set spending limits that fit within your household budget, prepay certain expenses to get the best rate and ensure all the vacation bills don’t come due at once, and create a savings strategy so you can comfortably pay for your vacation. If you plan carefully, you can relax on your vacation without worrying about the bills.