How to set your travel budget3 min read . Updated: 07 Sep 2019, 07:08 AM IST
- Start your research to get an estimate for what the travel will cost
- Public transportation is a great option in most cases because it’s inexpensive and it gives you a more local perspective
Are you a frequent traveller? If you spot a great travel deal or receive an alert from the various travel portals you are listed on, do you tend to opt for it immediately? Are you able to travel without worrying about money? Here’s how you can make your plans guilt free:
START WITH MAJOR TRANSPORTATION COST
Start your research to get an estimate for what the travel will cost. If you’re going from one continent to the other, look at the airfares. If you’re going for a shorter distance, it’s worth looking at train or bus fares. Check various travel aggregators and put alerts for drop in air fares at least 90 days before an international trip.
BUDGET FOR OTHER TRANSPORTATION
You are likely to need transportation once you arrive at your destination. Public transportation is a great option in most cases because it’s inexpensive and it gives you a more local perspective. Also factor in taxis if you think you might need one from the airport or within the city. Do you have more than one city on your itinerary? Bus, train and boat prices are typically easy to find online.
CHECK THE RATE OF YOUR ACCOMMODATION
Decide what type of accommodation you prefer – hotels, hostels, guest houses or apartment rentals. Make sure you read the reviews and check out the prices in the area where you plan to stay. Be sure to multiply by the number of nights you will be there.
DECIDE HOW MUCH YOU WILL SPEND ON FOOD
If you’re travelling to Western Europe, Australia or New Zealand, the United States or Canada, eating out will cost you about $8-$10 ( ₹530- ₹716) for lunch and $12-$15 ( ₹850- ₹1,000) for dinner. If you want to tighten up on your food budget, look for hotels or guest houses that include breakfast. Consider apartment rentals where you will have access to a kitchen. Even if you buy groceries and cook just a few times and always eat breakfast in the apartment, you will save money on your trip budget.
BUDGET PLAN FOR ACTIVITIES
Will you be using any tour guides on your vacation? Are there entrance fees for museums, parks, ruins or other attractions? Do you plan on doing something more expensive such as scuba diving or a hot-air balloon ride? Add up these travel costs too, and make sure you know which activities are inclusive and which ones are not. Do you like to shop when you travel? Plan accordingly for your fancies.
HOW TO SAVE FOR YOUR TRAVEL PLANS?
For many millennials, travelling is more important than other financial goals such as buying a car, saving for a house or even investing for retirement. Some create a separate travel fund for holidays and put aside an amount, say ₹7500, every month.
Systematic saving can enable you to fund holidays without depleting regular savings. The important point to consider is that if ‘vacationing’ is listed as a high-priority goal and savings are allocated towards this, you should also invest for goals such as retirement. Liquid or ultra-short debt funds are most suitable for travel goals within three to 12 months, as they do not attract exit load or volatility.
For travel plans between three-five years, you can consider hybrid equity funds which have the possibility of higher returns with some volatility. The objective is not to earn high returns but to keep the money aside for a specific purpose. With an adequate pool of money at your disposal, you can clinch a good deal, instead of racking up debt or making a costlier last-minute booking.
Nisreen Mamaji is a certified financial planner and founder of Moneyworks Financial Advisors