How to Plan your Vacation Budget

Last Updated: July 3, 2023

5 min read

Key points about: How to budget for a vacation

Creating a travel budget can help you decide where to go, when to go, and what to do on vacation.
Redeeming credit card rewards may help with your vacation budget.
Adding a vacation emergency fund to your budget can prepare you for unexpected expenses.

Feel like you need a vacation but worried about how you’re going to pay for it? It sounds like you could use a vacation budget planner.

A travel budget is a tool that can turn your vacation dreams into a reality. Planning with your travel budget can help you determine where you can afford to vacation, when you can afford to go, and what you can afford to do.

Setting your vacation budget

The first step in creating a vacation budget is to look at your current financial situation and determine what you can realistically and responsibly afford. Once you set your travel budget, start researching destinations and the types of vacations that fit within your vacation travel budget template. Even if you don’t have much money to work with, that doesn’t mean you can’t go on vacation. It just means you might need to get creative with where you go and how you get there. That includes knowing how to use credit card rewards and perks to your benefit.

Research costs for different destinations

When researching where you want to go, consider that various factors can affect costs. These include the following factors.

When you travel

Traveling during peak seasons can greatly increase your costs. Peak seasons are times like spring break, summer vacation, and Christmas or winter holidays. Suppose you’re able to travel during low seasons (late winter, autumn, or fall). In that case, you could save big on all kinds of vacation expenses, from transportation to accommodations and food. The more flexibility you have around timing, the better. Changing your flight or hotel dates by even a few days can often help you save money in unexpected ways. Another tip: if you can travel during the week, instead of on weekends, you may save money on your trip.

Where you travel

If you’re planning an international vacation, research where the exchange rate will make your dollar stretch the farthest. And whether you’re traveling stateside or overseas, remember that popular destinations for tourists, like a big city or a major attraction, usually cost more overall, and you should prepare to pay more money. Think about planning a trip to head off the beaten travel path (to a smaller town or a lesser-known area), which may come at a lower cost. As a bonus, you won’t have to contend with the crowds in less popular places.

How you travel

How are you planning to get to your destination? Driving is almost always cheaper than flying (yes, even when gas prices are high). This is especially true if you're traveling with kids and have to pay for multiple seats on a flight. If traveling with friends, consider how a road trip allows you to split the costs along the way.

What you do when you travel

A vacation to an all-inclusive resort overseas costs more than a local family camping vacation. But both options can be relaxing, rejuvenating, and fun. Adjusting your expectations of what a vacation looks like and allowing yourself to get creative in terms of the things you can do that fit within your vacation budget is key.

Plan your vacation timeline

The more time you can give yourself to plan and prepare for your vacation, the better. Planning a few months or even a year in advance gives you more time to save. Booking your transportation or accommodation early can also help you save money. When booking in advance, look for options with a good refund policy. This way, if a last-minute deal pops up, you can cancel your original booking and take advantage of more savings.

If your vacation is only weeks out, you’ll have to work with your current budget. See if there’s anything in your regular budget you can cut out for a few weeks (think eating out or entertainment costs) to set aside more money for your trip. Also, do some research to see if you can score any last-minute travel deals.

Planning to pay for your vacation

Now that you know what you can afford and where you want to go, it’s time to figure out how you’re going to pay for it. An easy way to save for your vacation is to set aside a regular amount of money in a savings account. You can manually deposit your vacation savings or set up an automatic payment to ensure you don’t miss a contribution. Saving your vacation money in a separate account is a good way to reduce the temptation to spend money on anything else.

Did you know?

If you collect credit card rewards such as cash back or miles, you might consider redeeming some travel expenses, such as an airline ticket or the cost of gas. The Discover it^® Miles Travel Credit Card allows you to earn Miles on every purchase and turn the miles into cash. Or redeem as a statement credit for your travel purchases like airfare, hotels, rideshares, gas stations, restaurants, and more.¹

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What to include in your vacation budget

When creating your vacation budget, include the big-ticket items like transportation, lodging, and food and drinks. Depending on where you plan to travel to, you might need to consider several other costs when creating your budget. Here’s a quick list to get you started:

Transportation: How will you travel to your vacation destination—car, train, boat, or plane? Do you have to rent a car or pay to park at the airport?
Lodging: Where are you planning to stay? A hotel room, vacation rental, an all-inclusive resort, or will you camp?
Food and drinks: Will you prepare your meals at home and bring them with you in the car? Or do you plan to eat at restaurants? Preparing your meals ahead of time may cut down on food costs.
Travel Insurance: If you plan to travel outside of the country (or even outside of your state), don’t forget to look into travel insurance that can cover things like itinerary changes, unexpected medical expenses, lost luggage, and more.
Entertainment: Think about what you want to do while you’re on vacation. If you plan to go to an amusement park, swimming pool, museum, sporting event, musical festival, or anything else that you might have to purchase tickets for, make sure you include the expense in your vacation budget.
Shopping: Do you plan to shop on vacation? What about bringing back souvenirs for family and friends?
Housesitting or pet sitting: Do you need to pay someone to take care of your house or pets while you’re away? Or will you take your pets to a kennel?
Travel preparation: Do you need to get or renew your passport? Do you require any travel visas based on your destination? What about vaccinations?
Travel fees: If you’re traveling internationally, you’ll want to check to see if your credit card charges foreign transaction fees. Discover Cards are accepted at 99% of places in the U.S. among places that take credit cards and over 60 million locations around the world.²

Have a plan in case you go over your vacation budget

While you don’t want to go into your vacation expecting to go over budget, things happen. Whether you get sick and have to reschedule a non-refundable flight, you forget your toiletry bag at home and have to purchase replacements, or you have to pay for an unexpected car repair, some things are simply out of your control.

Ensuring you have the proper trip insurance is one way to prepare for the unexpected. Budgeting for a vacation emergency fund is another great way to offset any unplanned costs and keep you from going into debt. If everything goes according to plan and you don’t need to dip into your emergency fund, you can use this money to start saving for your next vacation.

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