How to plan a vacation on a budget and still make unforgettable memories

Want to plan a vacation on a budget? Check out these steps for financially preparing for your next vacation, as well as some tips for keeping costs down while you’re on vacation.

Sleeping late, trying exotic foods, taking in breathtaking views, and finding plenty of material for your social media accounts are just some of the reasons you may be counting down the days to your next vacation. You’re probably less excited about the financial headache that inevitably hits once you’ve returned to reality and realize you’ve racked up debt in addition to the incredible memories. But if you plan ahead, there are a lot of ways to design a vacation on a budget so you can enjoy your time away to the fullest and skip the post-vacation blues when you get back home.

Don’t worry if a swanky destination is out of your price range, you can still have a luxury vacation on a budget.

How to plan a vacation on a budget

Wondering how to plan a vacation on a budget? Before you start booking plane tickets and accommodations, making restaurant reservations and creating your itinerary, you should first consider creating a vacation savings plan. Earmarking money for your vacation ahead of time can be one of the most effective ways to plan a luxury vacation on a budget. Follow these four steps to build a vacation savings plan that will help you get the most out of your time away while also avoiding any dreaded vacation debt:

1. Estimate your trip costs

To create your vacation savings plan, you must first get a sense of how much you might spend on your trip. To figure out how much your trip might cost, you’ll need to take time to do some research and cost comparisons.

“You need to add up four main expenses per day: nightly accommodation, meal spending, daily transportation and activities,” says Jen Avery, co-founder of a budget travel website she manages with her husband. For each primary expense, you’ll want to calculate the average cost per day.

To plan a vacation on a budget, estimate your costs, including airfare, accommodations, and meals.

To estimate the cost for your nightly accommodations, scope out the places where you’d like to stay. (You’ll find a wide range of costs for hotels and vacation rentals.) It may be more difficult to figure out how to eat on a budget while traveling—especially if you like to make choices on the fly when vacationing—but you can reference online restaurant menus, travel blogs and guidebooks to get an idea of the cost of meals in your travel destination. You can take a similar approach when estimating the cost of your daily activities and transportation.

If you’ll be going on an all-inclusive vacation, estimating your trip cost can be a lot simpler. In order to plan a vacation on a budget, you’ll need to confirm exactly what is covered in your fee and what may be an additional expense, such as excursions or specialty meals.

“When in doubt, always overestimate rather than underestimate, and be realistic in your estimates,” Avery says. “It’s also wise to leave some wiggle room for unexpected costs, treats and souvenirs that may catch your eye during the trip.”

2. Create a monthly savings goal

Once you’ve marked your next vacation on the calendar, some simple math will help you determine how much you will need to save each month leading up to your trip. All you need to do is divide your estimated vacation cost by the number of months you have between now and your trip. For instance, if you’re planning on spending $3,600 for a vacation that’s 12 months away, you would aim to save $300 per month (or $150 per paycheck if you average two each month).

You can look for easy ways to save on everyday expenses by identifying extras you can live without (even if it’s for the short term) like dining out, premium cable packages, unused subscriptions or lattes every morning before work. You can do this even if you don’t have a specific travel date in mind. You’ll be surprised to see how pain-free it is to make lifestyle changes that will save you money.

Once you’ve determined how much your trip might cost, you can start saving money toward that estimate. Create a final savings goal for yourself, and set money aside at regularly scheduled intervals each month. You could also consider opening an online savings account that would act as your vacation fund. That way, you might be less tempted to spend it on another financial goal or on discretionary items. Want to put your vacation fund on autopilot? Try automating your savings with direct deposit.

You need to add up four main expenses per day: nightly accommodation, meal spending, daily transportation and activities. Calculate an average cost per day of these.

Jen Avery, co-founder of a budget travel website

3. Find ways to earn more money

Even after you’ve put a savings plan in place and cut out unnecessary expenses, sometimes you still just need more money to make your vacation dreams a reality. If this dilemma sounds familiar, you may want to incorporate some side hustles you can do while working full time.

One easy way to make more money for your trip is by selling things you’re not using or that you don’t want anymore (think gently used clothing or baby items or toys that your child has outgrown). “Most people have even few unused items they can part with,” Avery says.

And there are a variety of other ways to earn more money, according to Avery: Participate in the sharing (or gig) economy by doing things like renting out your home, taking on some freelance or contract work or finding a side job.

4. Keep your eye on the prize

Focusing on your savings goal to plan a vacation on a budget can take time and determination. That’s why it’s important to find ways to motivate yourself—especially if your vacation is still in the distant future.

To help you stick to your vacation savings plan, Avery recommends following blogs and social media accounts of travelers you admire or destinations you hope to visit. Seeing travel photos and stories from people who are going to the same places you have your eye on can be exciting and help lessen the sting of making sacrifices now.

“Each time you turn down a coffee or a meal out, think about what you’ll gain on your trip instead,” Avery says.

You might also track the progress you’re making on your savings goal by regularly checking on your balance. Seeing those funds add up can be encouraging and may entice you to save even more.

Tips for keeping your average vacation cost down

If you’re still grappling with how to plan a vacation on a budget, there are some ways you can minimize the hit to your wallet. Once you’ve created a game plan for saving enough funds for your trip, you can also try these five tips to keep your vacation costs down while still enjoying a first-class experience:

1. Be strategic about your destination

One key tip to keeping your vacation costs down is to be strategic about your destination. For instance, if you want a beach vacation with accommodations directly on the water, you have a range of destinations at your disposal, from Bora Bora to California. If you’re open to lakeside locales, you’ll have even more.

You can plan a luxury vacation on a budget and have the experience of a lifetime without having to take a plane halfway across the world.

It’s important to remember that the average vacation cost varies widely based on the vacation destination. Some destinations are simply more expensive than others. For example, the vacation cost for a week-long trip to the Maldives might run you upwards of $10,000 or even $20,000, according to Courtnie Nichols, founder of an agency that focuses on destination weddings and luxury travel. But the average vacation cost for a week spent on the beach within the U.S. can be thousands less.

The key, according to Nichols, is to do a little bit more research and avoid areas that have a lot of hype surrounding them. If you really want to know the industry secrets for how to have a luxury vacation for less, Nichols suggests enrolling in programs that offer educational resources and can help you find the best travel locations based on your budget. Industry magazines and websites specifically for travel agents may also help you plan luxury vacations on a budget.

2. Visit during the off-season

Visiting destinations during the off-season is another great way to plan luxury vacations on a budget.

The off-season refers to the months when tourist crowds in a certain destination are smaller, usually because the weather can be dicey. For example, fewer people book Caribbean cruises during hurricane season. But the benefit to booking over hurricane season is that you might find  cheaper prices (and cruise ships tend to have alternative routes planned in case of storms).

If booking a cruise during hurricane season sounds too risky for you, don’t stress: Another way to travel on a budget is to visit a destination during its off-season when rates on everything from airfare to accommodations are typically lower.

“My travel savings strategy is to travel during the off-season,” says Debra Schroeder, who founded and runs a budget travel website.  

Schroeder has a bucket list of destinations she wants to visit, but she doesn’t mind the order in which she visits them. “So, if the airlines are offering cheap flights to a country that’s number 20 on my list, that’s our next trip,” she says.

But make sure to do some research about a destination’s off-season times, because they vary around the world, Nichols says. To find information on both peak and low travel seasons, she recommends checking out the destination’s official tourism board websites, reputable travel guides and government websites.

3. Book during promotional periods

If your heart is set on that cruise during the popular (and pricier) summer months, don’t lose all hope of planning a luxury vacation on a budget. If you book a cruise during the industry’s promotional season, which is typically early in the year, you may still be able to snag a deal. This is the time of year when cruise lines slash prices because there aren’t as many people taking vacations.

According to a leading cruise review site, the best season to find discounts is called “wave season,” and it takes place January through March. Wave season is like Black Friday or Cyber Monday for cruise vacations. During this time, cruisers can get free upgrades, value-ads like complimentary drink packages and fare discounts.

If you prefer your luxury vacations on land, the same idea applies. Take some time to research when your favorite hotel brands and airlines run their promotions and plan your trip dates accordingly.

If you’ll be heading on a longer trip with multiple destinations and are comfortable with the plan-as-you-go approach, you could even find deals on your accommodations by booking last-minute. Quincy Davis, a professional surfer who travels frequently for surfing trips and photo shoots, says she has found deals by booking a hotel on the day she needs the reservation.

The prime season for cruise discounts is called “wave season,” and it takes place January through March.

4. Join a loyalty program

You can’t discuss tips for luxury vacations on a budget without talking about “travel hacking.” This usually refers to using points—like those you receive from loyalty programs or by using branded credit cards—for free airfare, travel upgrades, access to airport lounges and hotel stays. While you can also use these points for other things, such as eating out on a budget while traveling or gift cards, travel hackers often reserve them for big-ticket travel expenses like airfare and lodging.

A debit card with cash back rewards is another way to earn money for your luxury vacation on a budget. For instance, the Discover Cashback Debit allows you to earn 1% cash back on up to $3,000 in monthly debit card purchases.1 Earning while you spend can go a long way toward helping you plan a luxury vacation on a budget.

Nichols also suggests joining a hotel’s loyalty program to get access to discounts. As a loyalty member, you’ll earn points for stays that you can later redeem for free nights. You can often get upgrades as soon as you join and exclusive access to flash sales via email.

There is one caveat when using points. When figuring out how to have a luxury vacation on a budget by using points, you may need to be flexible with your travel dates. Flash sales on hotels are typically only available within a short timeframe and sometimes airlines only have specific dates available for rewards travel.

“Each time you turn down a coffee or a meal out, think about what you’ll gain on your trip instead.”

Jen Avery, co-founder of a budget travel website

5. Join a house-sitting network

While some people plan to take a luxury vacation on a budget by redeeming points, you can also choose to get free accommodation by becoming a house sitter.

That’s what Amy Rutherford and her husband decided to do back in 2014 when they retired from the traditional workforce. Their plan was to travel the world, but they didn’t necessarily want to spend a lot of money doing it. That’s when they started learning how to travel for less.

Through their research, they discovered that they could join a network of house sitters who work all over the world. The idea was appealing, especially because this would allow them to experience places as locals rather than as tourists.

“Our very first sit was a dream, and we were hooked,” says Rutherford, who is the co-founder, along with her husband, of a video blog about frugal living and budget traveling. “The home was stunning and owned by an interior designer with two of the cutest and loving labs.”

Joining a house-sitting network can also help you plan a luxury vacation on a budget by getting free accommodations and experiencing places as a local rather than as a tourist.

Since then, they’ve stayed in several multimillion-dollar homes in luxury spots all over the country virtually for free. If house sitting sounds like a form of travel that’s up your alley, Rutherford suggests signing up. She says it can cost roughly $120 a year, and you can either go anywhere in the world or choose to stick to a specific region.

“After the membership fee is paid, there is no money exchanged,” she says. “We don’t pay the owners; they don’t pay us.”

She says the best jobs are very competitive, but she offers a tip for aspiring house sitters: “To build up our resume and our references, we took on several local sits.”

Travel doesn’t need to be expensive

If you’re scrolling through social media, you may be inclined to believe that share-worthy travel is reserved for the rich and famous. The truth is, you can get an upscale travel experience for far less by setting your budget, building your savings and trying some of these money-saving tips as you plan for your next trip.

And remember: Everyone has their own definition of luxury travel.

For Davis, the professional surfer, a luxury vacation is “to go somewhere beautiful and stay in a small open cottage that is walking distance to the beach.”

“I love to be active on vacations, either surfing, swimming, yoga or just long beach walks in the morning with a cup of coffee,” she adds. “That is an ideal vacation to me.”

Thinking about opening a savings account specifically for travel funds as you plan for your ideal vacation? Learn more about how to achieve financial goals with multiple savings accounts.

1 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay® is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.

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