Budgeting 101

For those of you planning a trip, budgeting is a very important skill to have.

In a world where people spends more money then they make, credit card debt runs rampant, student loans are out of control, where people buy houses and cars they can’t afford, I find it criminal that most people never get taught how to build a budget or how to maintain their finances.

Don’t take a trip you can’t afford! Budget to save for travel if you need to, but don’t go into debt for a vacation.

As a traveler, minimizing, adjusting and tracking your expenses can make a huge difference in the duration and comfort level of your trip.

A successful travel budget establishes an expectation of your spending and allocates funds for your different expenses.

In order to successfully use a travel budget, it is be necessary to track your expenses and balances.

Given these general needs, creating and using a budget for the first time might require the following steps:

  1. Determine your spending ‘period’ (weekly, monthly, etc) – When traveling, I use a monthly period as well as a ‘rough’ daily limit or daily average I like to try and maintain.
  2. Estimate spending per period – How much do you want to spend per month? You can figure this out by taking your savings and dividing how long you plan to travel (be sure to factor in the costs at your destination and any income you may have)
  3. Decide major categories of expenses – The big three for travel are Food & Drink, Accommodations and Transportation. Others may include vices like alcohol and tobacco, miscellaneous purchases and a splurge/relaxation fund.
  4. Itemize your expected expenses – allot a percentage of your funds to each category.
  5. Execute your budget – track your spending in a Travel Ledger and
  6. Review: How much did you spend? Does your budget need adjustment?

 

In later posts I will go into more detail on…

  • Budgeting in order to save for travel
  • Budgeting while traveling
  • How to create and use a travel ledger
  • A look at my travel ledger
  • How to manage your funds while traveling

2 comments

  1. Budgeting is so important and a lot of people miss this aspect of traveling. This is one of the reasons my family hasn’t traveled much as I would like. With 5 people flying gets expensive and driving everywhere is not an option. Weekly period budgeting works best for us though we hardly stay anywhere for more than a few days.

    • While I mainly track my expenses monthly, I also try and have a daily budget. Once you know that you can survive on $10;15;20 dollars/day on a location, it’s easy to try and stay under that limit (with occasional splurges as well)

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