How to Budget for a Family Vacation

Apr 30, 2022
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Nothing brings a family close together quite like a vacation can. But while memories from a trip may last a lifetime, vacations can also take a toll on personal finances. Fortunately, learning how to budget for a vacation is not only completely doable with a bit of extra planning, but it's a challenge the whole family can get behind.

If you're looking for ideas for family travel on a budget, consider these tips to keep your budget intact.

1. Set a budget

The first step in planning family travel on a budget is accessing what you can afford to spend. It's a personal choice based on your income and regular expenditures. If you have a maximum number in mind, you'll know how much to set aside each month. For example, if your maximum is $4,000, you know you should aim to save at least $333 each month for a year. 

2. Start looking for discounts on vacation packages

Once you have an idea of how much to spend on your perfect family getaway, then you can start hunting for the best discounts available. Travel planning sites are a good place to find the best inexpensive vacation ideas. Services like Google Flights will also allow you to look at multiple dates to maximize your savings potential. 

The further ahead you plan, the more likely you'll be able to find a package or deal that works for your desired dates and budget.

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3. Be realistic about your travel needs

Another big part of the vacation planning process is understanding your travel needs upfront. This includes whether you need to book airfare, what type of accommodations you choose, and transportation at your destination. These are all significant pieces of the vacation puzzle, and they account for a large portion of your overall budget. 

By assessing your travel needs early in the vacation planning process, you can find the best deals, such as low airline prices or discounts on multiple-night stays. But don't stop there. Start thinking about alternatives such as renting a small home, which could be less expensive than a large resort. Perhaps booking an airport shuttle instead of renting a vehicle may also save you money. 

By giving yourself time to plan and think through multiple options for travel, you can take a reasonably priced family vacation. 

4. Account for the little things

Another aspect of planning family vacations on a budget is to account for smaller expenditures once you're traveling. These are the expenses that may seem too small to add into your initial budget planning, but can end up pushing you past the maximum amount you want to spend. This includes items such as:

  • Meals, whether you're eating out or eating in
  • Entrance fees to museums, attractions, shows, and other activities
  • Gifts and souvenirs
  • Transportation costs once you arrive
  • Passport and visa fees
  • Travel insurance policy
  • Tips for staff
  • Pet-sitting fees

At first glance, these may not seem like huge expenses, but they can add a significant amount of money to the overall cost when you add them up. Make sure you have room in your budget to account for these items. 

5. Create a savings timeline

Now that you have your overall budget plan and you've set aside an amount for smaller items, it's time to start saving. 

First, create a savings timeline based on the overall budget. Like the aforementioned example, if your goal is to stay within $4,000, you know you need to set aside approximately $333 a month. However, if you have a longer or shorter planning period, this timeline may need to be adjusted.

Breaking the family vacation budget into monthly savings keeps it from wrecking your personal finances for other expenses, such as mortgage or rent payments. 

Look for expenses you can cut back on to meet your savings goals. By reviewing your entire family budget, you may find you're overpaying for certain services, such as auto insurance, or that you're spending too much money on streaming services. It's possible to take steps to eliminate waste in your budget and allocate these funds to your vacation plans.

6. Set up a savings account dedicated to the family vacation

You may find it easier to set up a savings account earmarked explicitly for family travel. Having an account like this allows you to set up direct deposits to help maintain your timeline.  For example, if you receive an unexpected bonus, such as an annual insurance dividend or incentive through work, deposit the funds into the dedicated vacation account.

7. Keep budgeting while on vacation

Knowing how to budget for a vacation also involves keeping up with the budget while you're on your trip. You deserve to enjoy your trip and relax and unwind thoroughly. But take a few moments to assess your finances while on vacation – it could prevent an unwelcome surprise.

  • Establish a daily discretionary fund: Whether you're using cash or a credit card, set aside an amount each day for discretionary spending. This is what you'll need for meals, local transportation costs, tips, and anything else you may do each day. Consider using a cash envelope system to stick to a firm budget.
  • Keep tracking daily: Take a few moments to check your balance each day and make sure you're staying within your budget. 
  • Use a rewards credit card: Credit cards not only make it possible for you to track your daily expenses, but you may even be able to earn rewards for your purchases while on vacation. Using a credit card to earn cash back or points towards the next family trip is one small way to reduce expenses — as long as you pay the balance before receiving interest charges. 

Your family deserves all the fun and memories you'll make on your next family trip. With a bit of planning and saving, family travel on a budget is not only possible, but something everyone can look forward to. 

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The information and content provided herein is for informational purposes only, and it is not to be considered legal, tax, investment, or financial advice, recommendation, or endorsement. You should consult with an attorney or other professional to determine what may be best for your individual needs.