How Not to Blow Your Budget on Vacation

Gabrielle Karol
Posted

Whether you’re planning a vacation in Paris or a skydive in the States this summer, we don’t want you counting pennies while you stroll along the Seine or thinking about your savings account as you plummet toward Earth.

Vacations are well-deserved treats and money shouldn’t be a cloud over these precious times away. On the other hand, the “anything goes” spirit that is so intoxicating during a trip can turn a little…toxic afterward, when you’re home facing staggering credit card bills.

Follow our tips for staying within your budget on vacation so money concerns don’t interfere with your good times.

How Not To Blow Your Budget On Vacation

Start Planning Early—With a Budget in Mind

The key to optimal vacation spending is—you guessed it—planning and budgeting. About 8% of your total yearly budget can go toward “fun” spending like travel. If you love to travel, you can increase this portion of your budget by cutting other areas. When trip planning, balance your total costs based on 1) where you’re going; 2) how you plan to get there; and 3) what you’ll do once there. For example, while a small island in the Pacific might have really great rates on hotels or restaurants, it might cost a small fortune to fly there—but you’ll save on low-cost beach activities. If you’re on a budget, plan a trip that doesn’t gouge you in all three areas.

(To learn how to find cheap airplane tickets, click here.)

Once you arrive at your daily allowance, set aside cash for each day in different envelopes. Use only what’s in your envelope each day.

Create a Daily Cash Allowance

After the initial investments of transportation and hotel, set a daily budget for expected food, drink, activities and souvenirs/shopping. Inflate the number by 10% to 15% as a cushion for small emergencies or unforeseen expenses. Vacations are a great time to practice the “cash diet.” Once you arrive at your daily allowance, set aside that amount in separate envelopes for each day and stash the envelopes in the hotel safe. Each day, use only what’s in one envelope. Your credit card can be saved for emergencies.

Foreign money often doesn’t feel like real money—we don’t have the same psychological association with spending it. So you don’t blow through half an envelope on a tip, consider jotting the cost in US dollars on the envelope to keep track. Or just keep looking at the envelope to see how much is left for the day!

Be an Exchange Expert

You’ll get the best exchange rate at your destination (not at home), and usually at a bank ATM. Foreign banks will have lower exchange rates than commercial exchange counters. Exchange the total amount of money you can spend based on your budget. Call your bank and credit cards ahead of time to find out their foreign transaction fees—some charge, some don’t. You’ll definitely want to know this ahead of time so you’re not racking up fees at the ATM every day or incurring extra charges every time you swipe. Credit card companies will also freeze your card if you don’t tell them ahead of time you’re heading to another country, or even to a different state (they’ll think someone has stolen your card). A courtesy call to your credit card company will save you from embarrassment in the gift shop.

Don’t Play Santa (but Don’t Be Scrooge, Either)

It’s tempting to pick up souvenirs for friends and family every time you pass a store. But while we’re all for gift giving, there’s no need to return from Italy with four leather bags for your mom, or a candle and a bracelet and a bar of soap for your best friend. Before leaving, make a list of people to buy gifts for and how much you want to spend on each person. When you hit a nice shop where you can knock several gifts off your list, buy in bulk and negotiate a discount. Shop with your budget in mind—don’t pick up cheap tchotchkes whenever you see them. And speaking of…

How Many Snow Globes Do You Really Need?

When going on vacation, you want to make your memories last. But before buying that miniature Eiffel Tower, think about whether the “souvenir” in question fits into your lifestyle or home décor. Snag items that work seamlessly with your lifestyle, like a fair-trade clutch from South America or a jar of pineapple jam from Hawaii—that way, vacation memories become a part of your everyday life instead of relegated to a dusty mantle display. Plan your year’s budget with your vacation in mind—if you know you can get an inexpensive silk scarf in Vietnam when you head there later this year, don’t buy one stateside, where it will be more expensive. Also, consider buying less stuff but taking a lot of photos you can later frame or keep on your phone or computer screen.

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Eat Like a Local

Hotel restaurants can often be much pricier than restaurants in the surrounding area. If you can’t afford to spend $30 each morning on the breakfast buffet, ask for recommendations for inexpensive cafes or sandwich shops nearby. Street food is another inexpensive option and is a great way to try authentic local cuisine. You can also save on breakfast, lunch and snacks—and experience local color—by buying fresh produce at local markets.

Leave Room for More

Leave room in your suitcase for items you may want to bring back so you don’t have to buy another luggage piece on your trip or get slapped with additional baggage fees. If you’re allowed to carry on or check another bag, consider bringing a fold-up tote bag and packing it in your suitcase to accommodate extra items.

Confession

  • Cory Anderson

    It’s so hard to budget once you get in the “vacation mode”. I’ve always tried to budget before I take a vacation with my family, but once you get into that mode, it’s hard to stick as planned. I miss the days when you didn’t have to budget a vacation growing up. We used to spend money on everything,  ID wristbands for all the kids in the extended family, eat anywhere we would like, and go to as many attractions as we wanted. Now it’s even hard to just take a vacation.

    • aaaa

      It is a challenge to budget. What we do in our family is create the budget, we have to have saved the money in advance, and we only pay in cash from what we saved for the trip. This way, we can’t go over the budget, and by constantly looking at the cash disappearing, we can see how we are doing. Works every time. Also, the amount we save gives us the ideas of where we can go and afford. So, if one year we only saved $1000, I guess we are not going to Disney with 2 girls for 10 days. :)

  • Lo

    Capital One has credits cards with a 0% transaction fee and they also have debit cards that don’t charge any fee when you use them to take out money abroad.  I used them on my most recent trip to Europe and it saved me so much money and took the hassle out of trying to figure out how much to take out of the ATM, since I could take out as often as possible!  

  • Lo

    Capital One has credits cards with a 0% transaction fee and they also have debit cards that don’t charge any fee when you use them to take out money abroad.  I used them on my most recent trip to Europe and it saved me so much money and took the hassle out of trying to figure out how much to take out of the ATM, since I could take out as often as possible!  

    • Linda

      USAA too :)

    • Linda

      USAA too :)

  • http://www.stylebaggage.com/ Nellene

    If budgeting on a vacation takes the joy away from your trip, I recommend going where you can spend more. For example: I wanted to go to Tuscany, Italy again. It would’ve meant really scrimping though. Instead we opted to go to St. Helena (Napa Valley). There we stayed in a “Italian like Villa” hotel, enjoyed high end private wine tastings and of course munching on Thomas Keller goodies, all for a fraction of the price Italy would’ve been. The ambiance of the vineyards gave the same feeling (close enough at least) of being in Tuscany. We were able to truly relax and enjoy ourselves which is what a vacation generally should accomplish. The best part was we weren’t overly worry about our “budget” which made it a great vacation!

    • CannotSitStill

      I understand your plight, our family gets the urge to the same. In our case, we will go, but use a lot of cheap places to stay, such as hostels, or we use HouseSwaps, or couchsurfing, and we will sometimes stay outside of a major city if it works. So, we’ve done house swaps in Paris, London, and Sydney, Hostels in Ireland, Portugal, and Spain, and stayed outside of Prague.

  • http://pulse.yahoo.com/_RP7AIZR474DN7PBQ4LLAMBXDZ4 Margaret

    Remember you are no longer allowed to take snow globes on planes.  The TSA will confiscate them.

  • http://pulse.yahoo.com/_RP7AIZR474DN7PBQ4LLAMBXDZ4 Margaret

    Remember you are no longer allowed to take snow globes on planes.  The TSA will confiscate them.

  • http://pulse.yahoo.com/_RP7AIZR474DN7PBQ4LLAMBXDZ4 Margaret

    Remember you are no longer allowed to take snow globes on planes.  The TSA will confiscate them.

  • Charles Berger

    You might also want to attend timeshare presentations to get the freebies, only if you are willing to spend some of your vacation hours listening to the presentation. But NEVER buy!! The salesmen will tell you that a timeshare is cheaper than staying in a hotel, “which can cost hundreds of dollars a day!” But of course, that is the nightly rack rate at an upper-end hotel, not the weekly rate. And of course, by the time you pay the weekly maintenance fee on your timeshare ($800) plus the amortized cost of the sales price, well, you’ve paid as much, if not more than it would cost to stay in a nice Hotel. This is a good article about this:

    http://www.timesharescam.com/blog/155-timeshare-prices/