Planning for a trip is exciting, but making a budget and sticking to it is not always an easy task. These are the steps you need to come up with and track your travel budget. I've also included a free downloadable Excel sheet to help you on your way.
1. Estimate Transportation Costs
If you’ll be flying, transportation is likely going to be your biggest expense. Start your budgeting by researching flight costs on Google Flights (google.com/flights) As with any budgeting, always round up and never use the cheapest listed flight in figuring your budget. That will guarantee failure because flight prices change all of the time and fees will increase the final cost even more. Instead, pick a flight that looks reasonable (few stops, etc) and round up the listed price. For example, if you find tickets for $860, round up to $900, or even better, round up to $1000 for some cushion.
Wait! Don't forget about all the other modes of transportation you’ll pay for on your trip. Will you be taking trains and busses? Will you be renting a car? What about local transportation? Will you need subway tickets or cash for taxis? These are often forgotten transportation costs.
For longer distances, use Rome2Rio (rome2rio.com) to estimate costs for trains, busses, and cars. This website provides quick estimates of ticket costs, or, if driving, gas and tolls costs. Once again, round up these prices before including them in your budget.
For local transportation, every city is different. You can usually do a quick online search to find out how subway fares works. For example, in NYC, each subway entrance costs almost $3, while in London, rates are calculated by how far you travel. In many cities, you can purchase a pass that will cover all travel for a specified number of days. If you know that you’ll be taking the subway often these passes might be your most economic choice.
Add up all of these estimated costs to get your total expected transportation costs.
2. Estimate Accommodation Costs
Lodging is usually the second largest expense on a trip. First you need to consider what kind of accommodations you want to stay in. If you want to try something other than hotels, which can generally save some money, read this blog post about other accommodation options. For budgeting purposes, do some quick searches to get an idea of relative nightly prices. Round up for taxes, fees, and daily price fluctuations. If you are staying in a hotel, check for hidden costs like parking or breakfasts and account for any fees you might accrue during your stay.
3. Determine a Food and Drink Budget
After estimating your expenses for transportation and accommodations, consider the cost of food and drink. Will you be buying groceries to cook, finding cheap street food, or going out to restaurants and bars? Your destination will determine the cost of food. Look online for a few local restaurants that look good (one cheap, one mid level, and one expensive) on Yelp, TripAdvisor, Opentable, or whichever user-review site you like. Click to view the menus. If prices are listed on the menu, you’ll get a decent idea about food costs. Use this information to set a daily spending goal for all meals and drinks. To calculate, multiply your daily goal by the number of days on your trip.
4. Factor the Costs of Tours, Tickets, and shopping
If you plan to visit museums and sites that cost money, or you know you want to spend money shopping, or on a special activity like renting scooters or going wine tasting, don't forget to budget in those costs. If you aren’t sure what you want to do yet, just guess about how much you’re willing to spend on entertainment and shopping.
5. Determine your overall Trip budget
Once you have subtotals for each of these categories, add them up to find your total estimated trip costs. Are they reasonable? Do you need to cut expenses somewhere? It's helpful to determine your budget early on so that you can make calculated decisions while you're still in the planning stages.
6. Calculate your daily budget
If you want to stick to a budget during your trip, it’s important to know your average daily budget (A.D.B.). Determine what costs you want to include in your daily budget before making your calculations. Here are three methods of calculating a daily budget.
Method 1: Some people like to include accommodation costs in the daily budget, especially if they aren’t pre-booking hotels. For this kind of a budget subtract only your transportation costs from your overall total, then divide by the number of days on your trip.
(overall budget – transportation costs) / days = average daily budget A.D.B
Method 2: Usually I prefer to book accommodations ahead of time, so I like to think of the daily budget as just what I spend during the day on food and fun. To calculate a daily spending budget along these lines, subtract transportation and accommodation costs from the overall trip budget. Then divide by the number of days you have in your destination.
[overall budget – (transportation + accommodations)] / days = A.D.B.
Method 3: For even more precision, subtract known tour and ticket costs, changing the daily budget to only include unknown costs like food and shopping. This method can be really helpful when you plan on booking expensive tours that could blow your daily budget. By subtracting those costs first, you can redistribute your daily spending more evenly.
[overall budget – (transportation + accommodations + tours)] / days = A.D.B.
Use a budget planning and tracking tool
I created an Excel spreadsheet that does a lot of the work for you. You can use it for your estimates or for your expenditures as they come up during planning. The remaining balance and daily budget is calculated for you so that you know what to stick to.
This is perfect for making budget estimates and for calculating your average daily budget (using Method 3).
To use this Excel sheet during your planning, type in your budget total and the number of days on your trip. As expenses come up enter the cost into the tracking sheet below and select the category.
Additionally, if you want to continue using the sheet during your trip, update the number of days left on your trip to keep your daily budget on track. This sheet also tracks how much you are spending in each category and how those subtotals relate to your overall budget in percentages.
I like to use this Excel sheet during my planning before I leave home. However, I don’t always travel with my laptop, so during my trip I prefer to use a budgeting app on my phone. Trail Wallet is the perfect complement. (voyagetravelapps.com/trail-wallet) With this app, you enter your daily budget (which you calculated on the Excel sheet before leaving home) and track your spending for every purchase during your trip.