Unless you’ve been diagnosed with chronic hodophobia (the irrational and intense fear of travel) you most likely love going on vacation. Most of us do. In fact, many of us love traveling so much that we often go into debt just to get our travel fix; or we sacrifice the frequency of which we travel; or we sacrifice vacationing in destinations we’ve always dreamed of visiting in lieu of more affordable ones.

The cold, hard reality is that travel costs money. However, with a little planning and discipline, you can experience outstanding vacations that neither break the bank nor relegate you to staying in seedy motels that offer a crack pipe and a can of Raid as amenities. In this step-by-step guide to vacations on a budget, you’ll find tips and strategies for maximizing your travel dollar.

Develop a long range travel plan
Make a list of the places you’d like to spend your annual vacations in each of the next five years. The first four years should be trips that you feel you can realistically afford. Reserve the fifth year for one of your bucket list destinations. Whether it be a trip to Paris, a Mediterranean cruise, or photo safari in Africa. This trip is meant to be your incentive and reward for managing your budget for the first four years.


Set your overall vacation budget
Determine the total dollar amount you are comfortable spending for your vacation. This amount will need to cover your travel, accommodations, meals, entertainment, and savings for your bucket list vacation. If you’re prone to taking great risks, living on the edge, and partying hard, you should budget a little extra for medical expenses and bail money just to be on the safe side. Here’s a suggestion for how you might allocate a vacation budget of say, $4,000.

60%  or $2,400 for travel and accommodations

20%  or $800 for meals and entertainment

20%  or $800 for savings for bucket list

Determine your travel and accommodations budget
Usually the two most expensive components of a vacation are getting there and staying there. Travel and accommodations are also the two areas where you can save the most money. There is a “getting there” continuum that ranges from chartering a private jet (astronomically expensive), to flying first class, to flying coach, to taking a train, to taking a bus, to driving, to hitchhiking (free). The same continuum exists for “staying there” as well. Your options may range from a five-star, all-inclusive luxury resort to a tent in a campground. Not only can you hit your target by adjusting your choices along each continuum, you can also realize additional savings by booking in the off season, by using loyalty rewards to purchase travel, and by bundling your flights, hotel, and rental car with the Expedia app.

Viewfinder Tip: Alternative modes of transportation like train travel can make the journey part of your adventure.

Determine your meals and entertainment budget
Once you determine an amount for your meals and entertainment budget, divide it by the number of days you’ll be on vacation. In the example above, if you were staying for five days, you could allocate $160 per day for meals and entertainment. I recommend putting the entire amount on a prepaid credit card and use it for all of your expenditures while on your trip. By monitoring the card’s balance with your smartphone, you’ll always have a good sense of how much you are actually spending and you’ll know whether to order the surf-n-turf or a hot dog when dining out.

Don’t spend money you don’t have to
It is quite common for most of us to overspend while on vacation. The excitement and emotion that comes with travel can sometimes cloud our judgement and cause us not to make the best financial decisions. Here are some tips to help avoid spending unnecessarily.

  • Don’t buy new clothes for your trip. It’s very likely that the people in your destination haven’t seen your old clothes.
  • Let lunch be your splurge meal of the day. Prices on the dinner menu are almost always more expensive than prices on the lunch menu.
  • Eat dinner at places where tipping is not expected such as fast food establishments or local street food vendors. This will immediately save you about 20%.
  • Consume water with meals. In most restaurants, alcohol and soft drinks can cost upwards of 250% to 400% of what you can get the same beverage for from a grocery store; whereas tap water is usually free. This can add up to significant savings over the course of your vacation.
  • Don’t buy souvenirs. We are all tempted to buy T-shirts with cute sayings, and shot glasses stamped with the name of our destination, but do we really need them to remind us of our trip? Instead, let your photographs and memories be your souvenirs. Oh, and unless you’re vacationing in China or Taiwan, it isn’t likely that the adorable handmade trinket was made by a local artisan from your vacation destination.
  • Contact your destination’s convention and visitor’s bureau or your hotel’s concierge about coupons or discounts that may be available for tours and attractions you’re interested in.

Open a vacation savings account
Now take 20% of your overall vacation budget and open a savings account at a local bank. Designate it as you bucket list vacation account. At the end of each year’s vacation, deposit any money left from your prepaid credit card from previous vacations into this account. Also, if you’re able to come under budget when booking your travel and accommodations, deposit that difference in your savings account as well. By the time the last year of your long range travel plan rolls around, your diligent planning, budgeting, and discipline will pay off and should have the means to afford that dream getaway!

How do you vacation on a budget?