Finance: How to Budget for Travel

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It’s no secret that the number one priority in our lives from a financial standpoint are my student loans. Off course, more important matters such as health, relationships, and happiness trumps that, but really not much else is prioritized before the loans. However, even before paying down the student debt entered the picture, Mike and I had decided early on in our relationship, before we even got married, that a top priority of ours would be travel. That hasn’t exactly changed, as you can probably tell from all the travel posts on this blog. Today, I wanted to go through how it is that we have the means to travel on a very tight budget.

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Set your priorities

Our ability to travel the world is built on a clear understanding that travel will remain a top priority for both of us. By defining this activity as extremely important, it makes it easy for us to give up less important things if it means that we will be able to travel. From the very beginning, even before we started paying down student debt, this is something both Mike and I felt strongly about. In fact, it was at the very forefront of our conversation when we started to check the feasibility of paying down over $550k in ten years. The first question to answer was, “Will we have enough money to still travel?”

Since this is such a high priority for us, we would give up almost everything in order to make it happen. The only exception, off course, is being free from my student debt. We were willing to give up buying a house, buying things in general, dining out (if it means dining out when we travel), the newest tech gadgets, and so much more. We were already frugalists before, but having travel as a motivating factor makes us even more successful at being frugal weirdos. When your priorities are clearly defined, the budgeting part becomes easy.

Set a budget

It is very important, especially in our particular situation, to plan for travel. I think that budgeting is useful for every category of spending, but it becomes imperative for those categories that will make your life happier. We don’t want to leave the decision of whether or not we can go somewhere to the whims of everyday life. In other words, we want to avoid the excuse “Life happens”, and we actually want our lives to happen.

Our budget for travel changes according to where we want to go. Typically, we decide on an amount to set aside every month using our favorite budgeting tool, YNAB! We will probably continue that trajectory for a couple of months. We treat it like money stashed away in an envelope. We use the “cash” in this envelope to pay for anything that involves travel expenses. If we ever go over, we would have to borrow from another envelope that month. As an example, overspending $50 in travel would require us to pull $50 from our allocated grocery money. In the past six months, we have not over-drafted from our travel envelope. When calculated, 2.6% of our income each month went towards travel.

Keep in mind that this is our top priority! Yet only 2.6% of our income went towards travel. That’ll give you an idea of how frugal we’ve been and how focused we are on paying down my student debt. 100% of my post-tax income in our first year of student loan repayment went towards the loans, plus help from Mike too!

To be fair, the budget is changing every once in a while. For example, since we have a huge three-week trip planned for the beginning of next year (where we will be visiting ten cities and two countries halfway across the globe!), we will be increasing our travel budget to 3.5% of our income for the last 6 months of this year. Nothing wild and crazy, but it is fluctuating as needed.

Have a plan

Call me Type A (and you would be right in doing so), but I don’t like to travel without a plan. Mostly because I find that travelling without a plan can sometimes be very costly. Choices will need to be made in the spur of the moment, and while that is fun at times, it also means limited research can go into choosing the best financial option. Plus, not having a plan makes the previous goal of setting a budget very, very difficult. It is hard to guess just how much money you need to allocate if you have no idea what you are allocating your money to. That being said, this isn’t to say our plans are entirely rigid. We have flexibility and I am the first to admit that our recent trip to Banff did involve cancelling an entire day of hikes in exchange for napping on a hammock lakeside and resting sore legs. And if we come across an ice cream shop that we want to grab ice cream at, we aren’t going to say to ourselves, “Oops, not in the budget. Can’t.” But typically, these changes aren’t so drastic that it throws our financial game plan out the window entirely. Within the budgeting, we have already budgeted for the possibility of a change of plans.

Save for the big stuff.

Usually, when we go someplace, there is one activity that we are uncompromising on. We don’t just visit a place to randomly visit. We went to Germany for Oktoberfest. We visited Mexico City because we wanted to eat at Pujol. I wanted to go to Banff to see what was left of the glaciers while I can. We went to Oregon after hearing about how a devastating fire last year wiped out all of its beauty. And we are going to Australia to celebrate our two year wedding anniversary on New Year’s Eve in Sydney. These are the big things. If you have a particular reason to go someplace, then go ahead and go for that reason! But go knowing that it requires you to save for the big stuff. We scrounge up the savings by giving up some of the everyday spending that a normal couple would make. I always say how easy it is for me to give up dining out regularly, if it means I can dine out when I am traveling elsewhere, and eat local food in a different country. We had no problem celebrating our first year wedding anniversary eating pizza, if it means that on our second year, we will be watching fireworks over the Habor Bridge in Sydney. Interestingly, even THAT is a free event! But you see what I mean. Don’t skimp on the big stuff, especially if there is a specific reason for your travels. Skimp on the little stuff that you could do without. I promise, it’ll make the big stuff that much more valuable.

Be frugal, still.

There is no need to skimp on every adventure. What’s the point of seeing a country when you don’t want to spend to see a country? Off course, there’s transportation that we need to pay for to get around, and food to be eaten. But, where you can, be frugal still. Our budget would not be the small sliver of a fraction of our income that it is without us being frugal, still. Here are the ways in which we save quite a bit on travel money.

  • We travel hack in order to buy our flights. I have written about the pros of travel hacking and what that has afforded us in this year alone. Long story short, we have used only points to book all our flights for this year! Our favorite travel hacking credit cards are Southwest Rapid Rewards, Chase Sapphire Preferred, and the Chase Ink Business Preferred.
  • We opt for AirBNB whenever we can. Typically, we find that those rates are cheaper than most hotels.
  • We book with Turo to save money on car rentals. Turo is the car version of AirBNB and we have had a great experience thus far with this company.
  • We reach out to friends and family in the locations we travel to. Some of our favorite trips are made more special by the company we keep. A plus side would be a place to stay, or a way to split the costs. I stayed at an old college roommate’s apartment when I visited Salt Lake City, UT. We stayed in my high school best friend’s extra bedroom when we visited New Orleans. Both of these friends drove us around everywhere we went! My sister provided an air mattress and shared her bed when we went to visit San Francisco. She also lent us her car for the weekend. Our Munich trip meant a free ride to the Castle Neuschwanstein when we hit up a friend’s cousin’s family. Also, we were invited to their house and got served the most amazing dinner, which to this day, remains one of my favorite memories while traveling. We reached out to my family to see if they wanted to go to Oregon with us, thus splitting the car rental fee and the AirBNB costs among seven people. All of this to show, not only is group travel more fun and entertaining, it saves you money as well!
  • We skip the touristy stuff. As I become better versed in traveling, I have found that less and less attraction lies in the touristy stuff. We would rather fill our days with free tramps through nature, exploring the city by foot, people watching as we eat at a café, and so on. We have found ways to see cities without having to spend much. I used to book excursions on every trip, until I realized that some of the best excursions are free. Our most recent Banff trip was focused around hiking all day. Trips to Calgary and Munich involved mostly walking around the city. Oregon was a mix of both. Skipping the touristy stuff also means that you can explore your way, without having to adhere to someone else’s timeline.
  • We don’t buy souvenirs to take home. Most of the stuff they sell in souvenir stores are absolutely useless and unnecessary. Unless we come across something that we think someone back home would really like, we do not shop for souvenirs for the sake of bringing something back. What we bring back to our friends and family are photographs and stories, mostly.
  • We borrow “just-this-once” items. When we go on camping trips, we borrow sleeping bags. I borrow my dad’s camera lenses when I go on big trips. I borrow clothing from my mom if I don’t have it in my minimalist wardrobe. Borrowing is such an important life hack, because it prevents us from purchasing things that we will only use once for travel.
  • We choose to disconnect. Going to a different country may require signing up for an additional payment plan in order to use your cell phone and other techy gadgets. Whenever possible, we simply go without. A trick would be to just opt for signing into the WiFi in cafes or our AirBNBs. Since a majority of our days are spent soaking in every last little detail of our current surroundings, we don’t really have a need for our cell phones. Planning the night before by looking up directions or the next day’s itinerary makes it a lot simpler too. Choosing to disconnect saves us not only money, but also, time since it keeps us from wasting time being “plugged in”.

These are just some of the ways in which we remain frugal while we travel. But like I said before, none of this equates to deprivation. It simply requires you to analyze what parts of travel you actually value, and what parts are simply excessive consumption. Once you’ve identified those priorities, it is very easy to cut down the spending in some areas in order to have enough in your budget to be able to see that one item on your bucket list. And if you need to, you can always borrow from other “envelopes” throughout the months leading up to your trip!

What about you? What are some ways to squeeze in a little extra money towards travel on a tight budget?

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