Vacation Budget Blunders: 8 Ways Travelers Throw Money Away
Your vacation budget—like any good financial plan—should reflect your priorities and your aspirations. That said, keeping a lid on your travel expenses can be more easily said than done.
The good news is: Planning an affordable trip on a budget doesn't require financial wizardry. The first step is to understand the common pitfalls that can waste your hard-earned (and hard-saved) vacation dollars. Here, the eight biggest mistakes travelers make when planning a trip budget—and, most importantly, how not to make them ever again.
Mistake No. 1: Not Establishing Clear Priorities
Before you begin building a budget, you need to identify what aspects of your vacation are most important to you and your traveling companions so that you can allocate funds appropriately. To simplify that inherently subjective process into something highly actionable—and, we hope, even fun and inspirational)—start by separating your “must-haves” from your “wants." For example, is staying at a 5-star resort a must-have for you? Would flying coach instead of something tonier be a deal breaker for your or your friends or family? Just because you’re visiting, say, Southern California, is it really essential to your experience that you pony up for a pricey rented convertible?
Mistake No. 2: Not Reviewing Your Finances
Before you even start establishing a travel budget, you’ll want to assess how much you can realistically afford to spend on your vacation. This requires taking a close look at your finances, including your savings and credit card debt. If you don’t have enough cash squirreled away, you may want to adjust your priorities (in other words, return to No. 1, above), or push back your travel dates to give yourself time to save up.
Having trouble saving? Try budgeting software such as Mint, a free online tool that not only shows you what you’re spending each month but also suggests ways to trim your expenses. Month after month, incremental savings can add up to money for gelato, restaurant meals, and souvenirs, and maybe even plane fare and hotel rooms.
Mistake No. 3: Not Using a Spreadsheet
Sure, just hearing the word spreadsheet may slap a great big whomp-whomp on your trip-planning process. But compiling all of your travel costs in one place will help you figure out roughly how much money you’ll have to spend on your vacation—and the best way to do this is, indeed, to use a spreadsheet.
There are a number of travel-budgeting spreadsheets that are available online for free. Our favorite is thiseasy-to-use template from Vertex42.com. You simply plug in a quantity and unit cost for each item; for lodging you can enter the number of nights you’ll be staying and the cost per night, and the worksheet will calculate the total costs for you. As you enter your travel costs into the worksheet, the handy pie chart will show you exactly where your money is going based on spending categories (e.g., hotels, meals, flights). It’s that easy.
Mistake No. 4: Overlooking the Smaller Expenses
Though lodging, food, and airfare tend to be the three largest travel expenses, there are a number of smaller travel costs that are worth factoring into your overall budget—they have a way of sneaking up on you if you’re not paying attention. Some of the most common expenses people forget are:
- Airport parking
- Travel insurance
- Gas
- Gifts
- Souvenirs
- Cell phone fees, such as data roaming charges when traveling abroad
- Visa costs
- Foreign transaction fees on your credit card (see more about this below)
- Vaccinations
- Gear (e.g., snow pants, ski masks)
- Toiletries
- Taxis and ride-sharing services
Mistake No. 5: Not Factoring in the Exchange Rate
Researching your destination’s exchange rate might seem like an obvious step, yet some travelers forget to do it before departing for an overseas trip. Before you leave home, check exchange rates online. One way to save money is by obtaining currency from your bank or a currency exchange instead of waiting until you arrive at your destination, because airport kiosks, hotel desks, street vendors, and shops make extra money by charging an undesirable rate of exchange.
Mistake No. 6: Not Giving Yourself a Buffer
While a degree of discipline is crucial, you also want to give yourself a little flexibility. Take a cue from any responsible CFO and set aside a portion of your funds—about 10 percent of your total budget—to allow for the unexpected. On vacation, that can mean the occasional splurge or any unplanned or emergency expenses, such as a flat tire (road trips don’t always go as planned!) or medical care. Label this as “miscellaneous” on your spreadsheet.
Mistake No. 7: Forgetting About Foreign Transaction Fees
Some credit cards charge up to a 3 percent fee on foreign transactions, which is why we recommend that international travelers apply for a credit with no foreign transaction fees, such as the Chase Sapphire Preferred card or the Barclaycard Arrival Plus World Elite Mastercard. One caveat about credit cards: There are some destinations, such as Cuba, that do not honor U.S.-based bank or credit cards at all—meaning you’ll have to arrive with cash.
Mistake No. 8: Not Understanding Hotel Fees
Last year, U.S. hotels collected a record-high $2.93 billion in fees, according to research by Bjorn Hanson, a professor at New York University’s Tisch Center for Hospitality and Tourism. Unfortunately for travelers, some hotel fees are buried in lengthy disclosure statements or tucked into bill summaries at checkout. But by knowing in advance what these hidden hotel fees are—and how much they cost on average—you’ll be able to set a more accurate budget.
What hotel fees should you watch out for? Check out our article “Beware of These Hidden Hotel Fees.” Some hidden fees can be quite expensive. Daily resort fees, for instance, can cost up to $50 per night, and they typically appear only after you have selected a room and are about to pay for the reservation, warns Randy Greencorn, co-founder of ResortFeeChecker.com, an online tool that, as its URL suggests, allows users to look up resort fees at more than 2,000 properties around the world.
TALK TO US:
How has a travel budget helped you save money for your trip priorities? We’d love to hear your tips—or blunders!—in the comments below.
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