Most people have a budget that guides the way money is saved and spent. Often these financial guidelines include categories for entertainment, investments, bills, travel and vacation, and necessities (like Starbucks or Dunkin). Putting money aside for a vacation is a great idea but I'd like you to consider the phrase vacation budget a little differently. Think of your vacation budget as how much you would like to spend (or you're willing to spend) of money you already have money saved and have earmarked as vacation money. Understand the difference? For this exercise, it's not a "plan to save" but a willingness to spend.
Here's why a vacation budget is important:
Phone call #1:
Travel agent (TA): Great! I'll get right to work planning your vacation. How much are you comfortable spending?
Client: I don't have a number in mind, whatever you come up with will be fine.
TA: There are a lot of options, finding the ones that match what you're looking for will be difficult without knowing what you'd like to spend.
Phone call #2:
TA: I've got your vacation all planned out and ready for your approval. (Insert details that match the request). It's just $25,000.
Client: $25,000!!!!!! Are you insane?! That's WAY more than I can spend. When I looked online I saw options for $1,500.
TA: $25,000 price includes a 5-star resort with butler service in the most desirable city, all your meals at top rated restaurants, private tours of all the things you want to see, and a private driver who will be available 24/7 to get you to and from your activities.
Client: I don't need any of those things! I specifically said, "a nice resort with great food, and excellent service. I also said I wanted to see these things, not necessarily with a private tour! This is outrageous!"
Keys To A Good Vacation Budget
- Know what you want to spend
- Know what you're willing to spend
- Be realistic
- Be flexible
- Be honest (with yourself and your travel agent / advisor)
No matter the category or amount of a purchase, most people have an idea of how much they're willing to spend. It's true, right? If you're buying a house you have an idea of what you can afford and are willing to spend. Going out to eat? How much it's going to cost is a factor in which restaurant you choose.
Knowing what you want to spend also applies to planning your vacation. Knowing what you'd like to spend saves time and simplifies everything. The example above is exaggerated, but the point is, knowing how much you want to spend shapes every decision including where you want to go and for how long, type of accommodations, and activities just to name a few.
In terms of vacation budget, a close second to having an amount you'd like to spend is knowing what you're willing to spend. For example, you might want to spend $5,000 but if spending a little more makes a big difference in the quality of the food, you would be willing to go to $5,500. Another reason to have a budget range is for things like ridiculously expensive airline tickets or activities you didn't know you had to do (but now you do!). Extra expenses can pop up unexpectedly in a variety of places.
Perhaps this article should have been titled, "Have a Realistic Vacation Budget." Travel shows and social media accounts show beautiful destinations without mentioning a (realistic) cost. As a result, it's easy to get caught up in the fantasy until the price tag brings reality crashing upon us.
As much fun as it is dreaming about a two week vacation to Bora Bora in an over water bungalow, making it a reality with a $1,000 total budget is, to say the least, not going to happen. As long as we're daydreaming about Bora Bora, you should know that a week in an over water property could cost $20,000.
Which brings us to the next point: be flexible. Not necessarily with your vacation budget. It would be unrealistic to think there is no "hard stop" to a budget. If you'd like to spend $1000 and the upper limit is $2,000 you won't be able to spend two weeks in an over water bungalow in Bora Bora, but that doesn't mean you couldn't take an amazing vacation.
I often tell people planning a vacation is like solving an algebra equation -- what I call a vacation equation. Lets say A is destination, B is number of days, and C is your list of "must haves" (close to th beach, ocean front, etc.). The vacation equation to solve is A + C + B must = $2,000. If what you want is a 7 night Alaska cruise in an ocean view suite, you're going to have to change some of the variables or your budget. In other words, you're going to have to decide which options are most important and be flexible with at least one of them.
And finally, be honest with yourself (and your travel agent) with your vacation budget. You know what you're hoping to spend and what you're willing to spend. Whether you're planning it yourself or with the advice and assistance of a travel agent, you'll save yourself a lot of time by searching with your budgeted amount. A good travel agent is going to use that information to provide you the best possible vacation experience, not use it against you to increase the cost.
Following these guidelines will ensure your vacation planning is efficient and the vacation ends up being affordable.
About the Author
Joel is a co-owner of JJ Travel Associates (a Dream Vacations franchise), blogger-in-chief at JoelKnowsTravel.com, lover of all things travel (especially UNESCO World Heritage Sites), wannabe comedian, and the person you should call if you're thinking of planning a vacation.