How to Budget for a Trip

Plan ahead, save up, and make the most of credit card rewards

A graphic saying Our Money's on Travel overlays a view of Greek islands at sunset

The Balance

Whether you’re planning an international vacation or a long-weekend road trip, the idea of escaping your daily life for the promise of relaxation and adventure is intoxicating. But while planning a big trip can be exciting, it can also be overwhelming—especially when you’re trying to figure out how much it’s going to cost.

We’ve created a simple Google spreadsheet to help you plan and budget for your next trip. The Balance’s Travel Budget Worksheet includes common expenses (large and small), plus space to enter credit card or other loyalty program rewards that defray some of the cash costs. It’s free to download and use (but you will need a Google account).

The last thing you want is to arrive at your destination and realize you’re out of money. That’s why it’s important to make a travel budget that includes everything from rental car costs to seat selection fees. As part of “Our Money’s on Travel”—our series on getting back to travel—we’re taking a look at how to budget for a trip, whether it’s the big costs or the small, plus a few travel hacks to help you save money along the way. 

Plan for the Big Expenses

Most trips involve significant expenses such as transportation and lodging. How significant they are depends on your plans—transportation could include plane tickets or gas for your car, and lodging could mean a five-star hotel or a cabin in the woods. Websites such as Budget Your Trip can help you plan for these costs, but don’t factor in any tips or tricks for saving money. So while this kind of budgeting site can be a good starting point, there’s a lot more that goes into planning your travel budget. Here are a few strategies for saving money on these major travel expenses.

Airfare

  • If you have access to multiple airports, like New York City residents, check prices out of all of them: LaGuardia (LGA), John F. Kennedy (JFK), and Newark (EWR). 
  • If you only have one local airport, consider booking a separate, cheaper ticket to a major hub, which may offer cheaper flights.
  • Be flexible with your dates and aim to travel during off-peak times. 
  • In pre-Covid times, there was evidence that you could get the best fares by booking 20-115 days in advance and flying on Tuesdays or Wednesdays. But those bets are off because airlines’ pricing formulas are in transition as they cautiously ramp up for more travel. For now, you’ll just have to look for deals and grab them when you see them.   
  • Follow airfare deal sites such as Scott’s Cheap Flights, Secret Flying, and Dan’s Deals to find out about cheap flights as soon as they’re available. 

Lodging

  • Check multiple sources before booking hotels to find the best rates and deals. For example, Hotels.com offers a free night for every 10 nights you book. Large hotel chains often advertise best rate guarantees and will give you up to 25% off your stay if you find a better rate elsewhere. 
  • Consider shared lodging, such as a private room or dorm in a hostel or a private room in a local’s house on Airbnb, rather than renting an entire home. 
  • Take advantage of any deals through membership programs such as AAA and AARP. 

Transportation

  • If you’re planning to rent a car, use sites like Autoslash to compare rental car costs across a wide variety of programs and get a quote for the cheapest rates available. 
  • Train passes, like the Eurail Pass, offer discounted or unlimited travel for a fixed price so you’ll never be surprised by last-minute ticket costs. 
  • Electric scooter companies such as Bird and Lime allow you to purchase daily or monthly ride passes in certain cities. 

Is Travel Insurance Worth It?

Travel insurance protects you in case of unexpected delays, cancellations, or medical costs in covered situations. But before you buy it from your airline or another carrier, check to see whether you’re covered by the credit card you’re using to book your trip. 

In addition, many airlines have eliminated change fees for flights, while many hotels have begun allowing flexible cancellations on their bookings. If you won’t face financial consequences for changing those big-ticket bookings, travel insurance may not be worth the cost.

Account for the Little Costs of Traveling

The big costs aren’t the only ones to consider beforehand. Your travel budget should also consider expenses like tipping, entertainment, souvenirs, food, and even cellphone fees.

Plan for as many of these costs in advance as possible so you aren’t surprised during your trip—or when you return home to larger-than-expected bills. 

Watch out for these costs and minimize or eliminate them with these smart strategies:

  • Rental car additional driver fees: If you need a second driver on your booking, book through a service that includes them for free, such as Costco Travel
  • Rental car insurance: If you already have car insurance, check to see whether it extends to rental cars. If you don’t own a car, look into a non-owner car insurance policy that will cover you when you drive a rental, which generally costs far less than traditional rental car insurance policies. Also, check whether the credit card you’re using offers its own rental car insurance
  • Debit card holds: Hotels and rental car companies will put a hold on your card when you arrive. If you’re paying with a debit card, the money they put on hold will not be available to you until the hold drops, which could take some time. If possible, make your bookings with a credit card instead, or include the hold in your travel budget.
  • Cellphone coverage: If you’re with Google Fi or T-Mobile, you’re in luck, as most locations are covered for free by your cellphone plan. Otherwise, consider purchasing a local prepaid SIM card, which can cost significantly less than the international roaming fees charged by most cellphone companies. Or plan to leave your phone on airplane mode and only use it when connected to Wi-Fi.
  • Entertainment costs: Many major cities offer tourist cards, which bundle tickets to a number of attractions onto a card that’s valid for a set number of days. If you plan to hit all the highlights, these cards could save you a bundle over individually purchased tickets.

Redeem Rewards and Bonuses

After diligently earning rewards on your travel credit cards, now’s the time to cash them in for free flights and hotel stays. You can choose to redeem points directly through your card’s travel portal, or transfer them over to hotel or airline chains to book awards. 

We recommend crunching the numbers to find the best way to redeem credit card points. For example, hotel chains such as Hilton and Marriott offer the fifth night free on award bookings, so it may make sense to transfer your points to your hotel rewards account. This can also be a good strategy for buying expensive flights, as airlines will sometimes charge a set amount of miles for a ticket even if the cash price is high. 

Make a Travel Budget Savings Plan

Now that you’ve got a handle on how to save money on travel expenses, it’s time to do the heavy lifting: actually saving money for your trip. Consider these ways to save up for your trip:

  • Set up an automatic transfer from your checking account into a dedicated “travel fund” account. This strategy keeps your travel budget separate, so you’re not tempted to spend it elsewhere before your trip.
  • If you receive a tax refund, put as much as you can straight into your travel fund.
  • If you have extra cash left over from the stimulus checks, move it into your travel fund. 
  • Work bonuses or side hustles could offer unexpected ways to boost your travel account.
  • If your family exchanges gifts, consider letting them know that you’re saving up for a vacation. Cash is always an option, and gift cards for hotels, airlines, and restaurants can also make a significant contribution to your travel budget. They could even give you frequent flyer points if they’d like.