Setting up and living by a budget ensures you have the opportunity to take advantage of all things fun in life. For me, that means travel. LearnVest’s guidelines say that all miscellaneous spending (in my book: leisure & fun) should account for only 8% of your budget. But, personal finance is ultimately that: personal. It’s okay to rearrange some of the wedges of your personal pie chart, as long as you never exceed your total income.
Use Me as an Example: Rearranging My Budget to Accommodate Travel
Although LV recommends spending 8% of your total income on fun miscellany, I actually spend approximately 12% of my budget on travel, alone. The year I went to Antarctica, travel took up nearly 25% of my total annual spending. The thing is, that’s okay.
1. To Support Higher Expenses in One Area (Like Travel), Reduce in Others
If you’re a travel junkie, too, make sure to adjust other categories of your spending. For example, I’m not a big shopper—and I’m currently conducting a financial experiment to drastically reduce my rent costs. As the LearnVest financial planner in residence, I’m actually going to give you permission to spend money…but only if you reduce your spending in other areas, accordingly.
2. Assign a Dollar Amount to Your Travel Goals
Are you more about sipping mojitos on the private beach of a luxury resort, or about backpacking through Yosemite? Would you rather take multiple long-weekend trips or save up vacation days for a longer adventure in a faraway land? Crunch numbers on your travel history and other savings goals in order to calculate how much you can afford to spend each year on travel. Then, assign a concrete dollar amount. Divide that by 12 to figure out your monthly travel budget.
3. Adjust Your Overall Budget Accordingly
If you want to prioritize travel spending, maybe you buy a cheaper car or cook at home more often. Use your favorite budgeting tool to play around with different scenarios. Whatever you decide, make sure your total budget doesn’t add up to more than 100% of your income.
4. Follow Your Monthly Travel Budget, Even if You Don’t Have a Trip Planned
Even if you don’t take a trip every month, save for travel regularly in your monthly budget. Consider setting up a separate savings account into which you can contribute your budgeted percentage each month. If you have a specific goal you’re working towards, great. If not, setting aside the cash regularly will give you a head start whenever you choose your next destination (or it will allow you to take spontaneous last-minute trips, which is one of my favorite pleasures in life).
5. Actually Go!
I strongly recommend at least one getaway per year, even if it’s just for a long weekend. Vacations allow us to recharge and escape our normal routine, which is an essential part of overall happiness and prosperity.
Plan ahead by including travel in your overall budget so that you don’t end up missing out—or worse yet, racking up credit card debt—to satisfy the need to get away from it all.