How to create a travel budget for your next holiday

Key points

• Research accommodation and transport costs in advance so you can budget for these bigger expenses

• Estimate daily spending across food and drink, activities and local transport 

• Create a cash buffer of 10% or 15% for emergencies 

• Track expenses while you’re on holiday and consider daily spending caps to stay within your spending limits 

Dreaming of blue skies and white sandy beaches? There’s a lot to consider before you start packing your suitcase, including creating a budget for your upcoming travel plans. Last-minute holidays can sound spontaneous and fun, but it could actually pay to plan ahead.

So, let’s look at what it takes to create a travel budget before your holiday, and then how to make the most of your travel money during your trip.

Budgeting before your holiday 

If you would like to create a budget for an upcoming holiday, the first step is to review your finances and understand your outgoings. It can be easy to bury your head in the sand, but without a clear picture of your money, you’ll struggle to create a successful budget. 

Non-negotiable expenses 

Once you understand your bank balance, it’s time to get into the details of your trip as this will help to build your budget. 

So, what are your non-negotiable expenses? 

Travel and accommodation can be the biggest chunk of your budget, so take the time to research different modes of transportation and the costs involved. For example, if you’re flying, use price comparison tools for your departure dates to see which airline is offering the best deal. 

Prices of hotels can also vary depending on your desired location, so try not to pick the first hotel you find. Instead, explore lots of different options to get an idea of realistic costs. It’s also worth including in your budget the possibility of a hotel before an early morning flight or taxi costs to and from the airport. 

Core spending categories 

With these bigger expenses considered, start adding them to your budget and you’ll soon see how much your holiday might cost. If you want to get a clearer picture of the expenses involved, allocate funds to food and drink, attractions and local transit costs. 

Research meal prices in your destination and review local websites for information on attraction entry fees and transport costs. 

Add an emergency buffer 

Although this research is helpful for your travel budget, costs may change slightly, so add an extra margin to your total costs. This could be an extra 10% or 15% of your budget, and this will help to absorb any surprise costs. 

Consider ordering travel money in advance 

It’s handy to have some travel money in your wallet, and you can include this in your budget too. Exchange rates can vary depending on the provider and location, so consider comparing providers to review rates and understand the costs involved. 

Once you’ve done all this planning, you’ll have an idea of how much your holiday could cost. Compare this to your savings and outgoings, and decide whether you could meet this realistic budget. 

Managing spending on your holiday 

You’ve now done the hard work at home by creating a travel budget, but the next stage is managing it during your holiday. Sticking to your budget can be tricky, but there are things you can do to make it easier. 

Track your expenses 

Keep an eye on your spending during your trip by tracking daily costs. By making a note of what you’ve spent each day, you’ll be able to align this with your overall holiday budget. This will help you to avoid running out of money towards the end of your trip. 

Try a cash allowance 

If you’re overspending, you could try allocating a specific cash allowance at the start of each day. Physical currency means you’ll have a tangible spending cap for daily expenses, but remember to keep your cash secure. Plus, consider using debit, credit or prepaid cards for larger expenses as they can come with further protection. 

Make the most of free activities 

Your holiday doesn’t always have to involve spending money as you could explore local attractions by foot to avoid unnecessary taxi costs. There are also museums offering free admission days and beautiful public parks with historic architecture to discover. 

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This article is for promotional or information purposes only. You must not rely on it as advice.