How to make a world-class travel budget

Influencer: “Travel is the only thing you buy that makes you richer.”

Your bank account: “No.”

If you’re hoping to jetset around the world, cost is one of the biggest hurdles. From airfare to accommodation to travel insurance premiums, it seems like every aspect of your trip wants to shake you up for cash. But instead of getting discouraged and letting our travel dreams die, let’s frame travel costs with a more affordable and achievable mindset. While not all of us are millionaires, we can definitely take charge of our finances and set goals.

So without further ado, here is a breakdown of the top travel costs to include in your budget.

Let’s get one thing straight: don’t be afraid of a budget. We tend to hear that finance buzzword and immediately think, “Poor. Restrictive. I don’t understand.” But budgets are there to enable, not hinder, your spending. All we need to do is change our mindset. Instead of “I can’t spend that much,” encourage- you with “I have so much to spend”.

Luckily, tech folks have created some pretty amazing (and free!) budget apps to help us achieve certain goals. And saving for travel doesn’t have to be boring either!

On the spending side, no budget or trip is alike. Costs vary depending on your:

  • Destination. Where you go affects everything from accommodation and airfare to currency exchange rates and all the other costs needed to get there.
  • Entertainment route. Pay for gigs? Are you walking in a museum or in the remote nature? Whether you go cheap or luxury, it’s nice to have something to do once there. Unless staying in hotels is your jam. You do you!
  • Food preferences. Eating out or eating in? Shopping for yourself might be cheaper, but maybe you’re going somewhere where you have to bring your own food and water. Maybe you even have a dietary requirement to consider. Either way: meal plan.
  • Personal needs. Everyone is beautifully different and will have different needs on a trip. Maybe you need to budget for medical or accessibility costs, or you need to avoid long-haul flights by paying extra for frequent layovers. If there are small non-negotiable expenses for you, put them in the budget!
  • Travel companions. Flying solo certainly makes budgeting easier, but taking the little winks or your partner can be fun too. Consider who you are traveling with and how they will affect your budget accordingly.
  • Travel agent/company/tour operator. Anything pre-booked can change the price of your trip, for better or for worse. But some countries will only let you in if you arrive with an approved travel agency that sponsors your visa, so this may not be optional. Smartraveller is a great government resource for advice on visas and other travel restrictions to keep in mind.

A good way to think about what you will need in your travel budget is what you need in day-to-day life. A place to stay, a way to get there, and non-negotiables like food or funds for emergencies (this is where travel insurance can come in). Once you have an idea of ​​what you need here, you can set goals for going abroad.

Let’s break down some examples of costs and what they might look like in a Travel budget of $2500.

Transportation

  • Example savings goal: $1,500

Planes, trains and automobiles, oh my! Fares add up quickly and can cost you anywhere from $100 for domestic flights to $3,000 for international flights – and that’s just a savings.

Browse some booking websites to estimate the approximate cost of a round trip to reach your destination, including baggage, food or seat fees. Also keep the time of year in mind and avoid flying during peak periods like Christmas or summer holidays.

Also consider how you plan to move once you land. Will you take public transportation, rent a car, or hail taxis? Look to local reviews for cost and safety recommendations so you don’t get stuck and budget accordingly.

Lodging

  • Example savings goal: $300

Hotel or hostel? The classic traveler’s riddle. Hostels can be economical, but not necessarily the nicest (or safest) option. Meanwhile, even two-star hotels can scam you for up to $200 a night. What is??

Browse the accommodation options at your destination, including AirBnBs or rooms to let, to get an idea of ​​the price. Consider how many nights you plan to stay and whether you can afford an emergency stay in case your flight is canceled.

Food

  • Example savings goal: $300

Everyone has to eat, so think about how you plan to eat abroad. Some countries have amazing cuisines to try, so eating out once or twice could create some amazing memories. But then again, sometimes a simple grocery store at the local market and a home-cooked meal at your AirBnB are more affordable.

Aim for a variety of options and consider your dietary needs, preferences and resource constraints. For example, if you plan to cook, you will need facilities to prepare, eat, store and dispose of food. If you plan to eat out, research a few options and consider pre-booking places to control your spending. Also consider food safety concerns, as some destinations may require you to eat BYO meals.

Entertainment

  • Example savings goal: $200

You don’t travel to be bored, after all. Discovering the magnificence and culture of another country is one of the great joys of traveling abroad, so research what you would like to do once there and if there are any costs. Maybe you want to listen to live music and see the sights. Or maybe you’re just there to backpack in nature. Either way, choose what sparks your imagination and enthusiasm: that’s how you motivate yourself to save.

Tip: Invest in experiences, not memories. (Although there’s certainly nothing wrong with a little keepsake or two).

Emergency cash

  • Example savings goal: $100

Most budgets do not include the “emergency break” fund. It’s the money you keep in case of surprise delays, cancellations, medical emergencies, thefts and other misfortunes. $100 is also a minimum, so while it’s never fun to think about, consider how much money you might need to get out of a bind and whether travel insurance might help offset the costs.

Travel insurance

  • Example savings goal: $100

Another often forgotten but non-negotiable element. If you can’t afford travel insurance, you can’t afford to travel. Especially if you’re traveling on a budget, the right policy could help cover unexpected costs and prevent accidents from destroying your bank account.

When comparing policies, be sure to weigh not only the premium, but also the coverage, because there’s no point wasting $20 on a cheap policy that won’t cover you adequately. Read the PDS to see what’s included or excluded and avoid these 5 common mistakes.

For more information on the importance of travel insurance, see our comprehensive guide.

Whenever setting savings goals for your travel budget, it’s important not to get demotivated or get carried away by fantasy. Instead, set SMART goals: Specific, Measurable, Achievable, Relevant, and Limited in time.

  • Specific: know exactly why you are saving and why. This is where research and budgeting come in handy.
  • Measurable: your goals are not vague or wishy-washy. “I need $X for food, minimum.” Fortunately, budgets make this very easy. These are just numbers!
  • Feasible: the goal is realistic for you. There’s no point in aiming for $6,000 in hotel costs if you can barely save $200 a month.
  • Pertinent: the budget item actually counts for your trip. A clothing budget might not be suitable for your trip to Antarctica.
  • Limited in time: deadlines are mandatory! If there’s no deadline for your savings goals, you won’t be motivated to stick to them. Tie your savings deadlines to fixed goals like ticket bookings or vacation days to stay honest.

Once you have set SMART goals for your travel budget, your journey begins! Have a good trip.

Do you want to travel? Compare travel insurance policies below.