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How to plan for the costs of big trip
Create a travel budget that allows you to experience new places and cultures — without added financial stress.
It can be fun to imagine a long beach vacation or an extended trip overseas, but without proper financial planning, those dreams will remain just that.
Creating a travel budget and savings plan far in advance of your departure date will help you achieve your travel goals and enable you to truly relax on your trip.
Your Ameriprise financial advisor is here to help you plan for life’s many financial goals, including travel. Here’s how you can plan for the costs of a big trip.
In this article
- Think about what you value in a vacation
- Create a travel budget
- Determine your timeline
- Focus on savings
- Questions to ask your Ameriprise financial advisor
Think about what you value in a vacation
Expenses can add up quickly on vacation, which is why it’s important to reflect on what your financial priorities are for your travel experience. Do you place high value in flying first class, or would you rather allocate your budget toward something else, like fine dining experiences? Will you spend a lot of time at the hotel or resort, or would you rather be out sightseeing? Think about your priorities first, so you can strategically align your spending with the experiences that you value most.
Create a travel budget
Once you understand what your priorities are for spending, it’s time to create a spending plan. Budgeting for vacation can be challenging because there often are many hidden expenses with travel and it’s easy to underestimate how much you’ll spend.
Consider the following costs in your budget:
- Accommodations: Are you staying at a hotel? Relaxing at a resort? Renting a home? Consider all the fees and taxes that are included with your lodging.
- Transportation: Account for your travel costs to and from the destination, which could be airfare, train tickets or gas, if you’re driving. Remember to budget for any travel costs when you arrive at your destination. This could include money for an airport shuttle, renting a car or taxis.
- Dining and food costs: Research the cost of living at your destination and consider setting a fixed daily amount allocated for food and drinks.
- Trip excursions: Whether you want to go on a guided tour or take surf lessons, research any potential additional experiences in advance and add a line item for them in your budget.
- Travel insurance: Travel insurance may add to your expenses, but getting sick, injured or stuck without the proper insurance can be more costly.
- Gratuity: Remember tips for service providers, such as housekeepers and tour guides.
- Pet and home care: If you have pets or plants that need to be cared for while you’re gone, consider the costs of house sitters, pet sitters or pet boarding services.
- Shopping expenses: Perhaps you’ll want to purchase a souvenir or buy gifts for relatives while you’re away.
After you’ve added all your costs, consider adding a buffer to account for any unexpected expenses. You deserve to relax on vacation, and being generous with your budget on the front end will help minimize stress related to spending during the vacation.
Determine your timeline
You don’t need to know to the exact dates of your trip, but it’s helpful to have an approximate idea of when it will be so you can plan for any extra steps, such as obtaining a visa or renewing your passport for international travel. This estimation will also help you determine how costs may vary. For example, it may sound great to travel during the summer when your children are out of school, but it’s also peak travel time, which can affect your bottom line. Touring opportunities and costs can also differ significantly depending on the season.
Focus on savings
Arguably the biggest question to answer is how to pay for your travel. Perhaps you already have savings or maybe you plan to allocate this year’s bonus toward the trip. If you don’t have the funds on hand, consider creating a systematic savings plan for your travel goals. This means you will automatically set aside a specific amount of your income at regular intervals to save for your trip.
For example, if your travel budget is $10,000 and you have two years to save for your trip, you’ll want to systematically save approximately $420 each month to reach your goal.
Advice spotlight
If frequent travel is your priority, consider adding a regular line item in your monthly budget. Automatically transferring a set amount of money to a specific travel savings fund on a regular basis can be an easy and consistent way to save for your trips ― even if you haven’t picked a specific destination.
When you’re ready to reach out to an Ameriprise financial advisor for an initial complimentary consultation, consider bringing these questions to your meeting.
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