Guide to figuring out how much you can spend on your dream vacation + tips for saving funds for the journey.
Money. Blah. As a family living off a teacher and writer’s salary we know a lot about budgeting and gettin’ thrifty. And yet, despite our often scant bank account, Bailey and Hudson still have a taste for the fine life and like to save up for the occasional stay in a shnaz hotel, which is why you’ll find tips for everything from luxury to budget accommodations on this site.
Eric on the other hand, could happily stay in a tent on any and all trips, even if it’s snowing. No joke. So we get it. We get the need to not drain the bank account for a trip, yet sprinkle it with the amenities you desire.
This is the process we use to take a (sometimes painfully) honest look at our finances, and figure how much can be siphoned off for travel.
Timing Tip: If you're planning a big trip, it's wise to start planning about a year in advance so you’ll have ample time to save if the following activity results in a budget that can’t accommodate your travel preferences.
Figuring out the max amount you can spend on the trip.
To do this, take a look at your annual household income, and determine your average monthly expenses for essential items. For example, groceries, rent or mortgage, insurance, education, medical care, retirement contributions and anything else that is more important to you than a vacation.
Next, figure out what is left over. Let’s say you determine that annually, you have $25,000 left over after subtracting the essentials from your household income. If you want to invest in no extras but this one trip for the rest of the year, then you have $25,000 to spend on it. But we’ll take a wild guess and say there are other extras you enjoy like eating out, entertainment, a gym membership, taking the occasional weekend trip, buying gifts and other activities that add up. So...
Make a list of all of your common extras and figure out (ballpark) how much you spend on each per year. Now what’s left of that $25,000? Let’s say there’s $5,000 remaining. Will this amount cover the accommodations, airfare, additional transportation, food, activities and insurance for your trip? We understand this may be a difficult question to answer before making decisions regarding accommodations, airfare and vacation activities, but this number can inform the travel choices you make. While there’s less wiggle room with airfare rates, you can often find lodging and extracurriculars that fit within your budget.
If you’re looking at that $5,000 (or whatever your number is) and think it just won’t be enough to cover the type of trip you’re planning, move on to the next step.
Discovering where you can save.
Reexamine the list of extras (e.g., entertainment, clothes, small trips, gym, etc.) that you came up with, and discuss with your family what extras you can all do without to save money for your trip. For example, for a surf vacation to Nicaragua Bailey gave up a frozen yogurt addiction and online shopping habit, Eric put the brakes on his hat and shoe procurement, and Hudson had to slow his roll with Lego collecting.
This “how can we save” conversation offers a juicy opportunity for your family to get clear on priorities, while the eventual commitment to the budget and agreed upon sacrifices heightens everyone’s level of dedication to the success of the adventure. And hey, a family who saves together stays together.
Store saved money in a set location.
To ensure the money you save on your sacrifices actually gets saved, it can be helpful to have an envelop (or other safe location) where you store the cash you would’ve spent on that Marvel Lego set, skateboard, dinner and a FroYo or anything else that’s not as important as your family adventure.