How To Create A Travel Budget in 6 Simple Steps

If daydreams of sand beneath your toes are becoming so vivid that you've come to find yourself sitting barefoot at your cubicle, I'd say it's time to start making your daydreams reality.

"But how can I save enough money to travel?"

So glad you asked.

This article is full of our favorite tips and hacks to help you save money for your dream trip. 

"Well, how much money do I need to save for my trip?" 

Patience, grasshopper. We're about to tell you. There's a formula we always use to create a travel budget, and we're going to go through it with you, step by step. 

But first, we want to emphasize just how important it is to make a budget even before you start planning a trip. 

Your budget will determine how much money you need to save, and it will also kind of shape your trip. For instance, if your travel budget is small, you might opt out of certain cities or activities. And if you've got a lotta dough to spend, you can research all the fun things you can do with it!

With numerous 2-week vacations, a 3-month journey, and nearly a year-long round-the-world trip, we've made more travel budgets than we can really recall. We like to consider ourselves masters of creating travel budgets.

And we're going to share with you exactly how we do it, in 6 simple steps.

The beauty of this exercise is that you can cater it to fit whatever your dream trip may be - whether it be a one-week vacay in Hawaii or a one-year journey around the world

And better yet, it only takes about 20 minutes to come up with a really solid plan of how much money you'll need to save for your trip. So what are you waiting for?

Let's take the first step in turning your daydreams into reality...

Step 1: Define your Travel Style

Travel is completely personal, and there's no "right" or "wrong" way to do it. But in order to determine your budget, you've first got to figure out your travel style.

Read the following statements and see which one sounds most like you:

Budget Traveler:

"I don't mind sleeping in dorm rooms or taking local forms of transportation (even though it's sometimes slower). I prefer eating at authentic "hole-in-the-wall" type eateries and don't typically like doing organized tours. I enjoy traveling on a budget because it allows me to interact with locals and often brings more adventure than when you pay top dollar."

Mid-Range Traveler: 

"I like a mix of comfort and authentic adventure. I don't want to sleep in dorm rooms with people I don't know, but I don't need a 5-star hotel every night. When traveling, I enjoy eating at a variety of places –ranging from street stands to nice cafes. I like splurging every once in a while, but am okay roughing it a bit too. For me, it's all about balance."

Luxury Traveler: 

"When I travel, I like to enjoy the finer things – from plush hotels, to the top-rated restaurants and entertainment. I think that a vacation should be full of splurges, and I don't like holding back. I enjoy once-in-a-lifetime experiences and I like to have all the details arranged for me, even if it costs more money. Traveling is my time to relax and explore, and I don't want to miss out by sticking to a strict budget." 

So which one is it?

Maybe you are between two styles. Not quite "budget", but not exactly "mid-range" either. Or perhaps you're between "mid-range" and "luxury".

And your travel style can change: You might usually consider yourself a "budget traveler", but you want to take a super luxurious trip for your honeymoon. Or maybe you typically like to pamper yourself on trips, but you've dreamt of visiting Iceland for ages, and the only way you can afford to do it is on a budget.

Remember, there is no right or wrong way to feel. But determining what type of travel style you identify with is the first step to coming up with a realistic budget.

Step 2: Find your Daily Budget

Do a quick Google search for a daily budget of a country you're thinking of visiting. A good site to start with is Budget Your Trip.

Choose a country, your travel style (Step #1) and your currency, and you'll get a pretty good estimate of how much to expect to spend each day.

Write this number down because you'll need it for the next steps.

Step 3: Get your Preliminary Total

Multiply the number you got in Step #2 (Daily Budget) by how many days you plan to be there. This will give you the preliminary cost of your trip. But, hold on – you're not done just yet!

Step 4: Give yourself some "Padding"

Now, calculate 10-20 percent of the preliminary total you got in Step 3. 

You know yourself best. If you're great at sticking to a budget, maybe you can get by with an additional 10%. But if budgets aren't your thing, maybe an extra 25% is more realistic. We typically add a 15% padding. 

Add this number to your total, but don't include it in your daily spending budget (Step 2). Remember, you don't necessarily want to spend this money – it's just there as a buffer for souvenirs, last minute splurges or incidentals.

We try not to touch this "padding", but it's good to know it is there if needed.

Step 5: Plan your Splurges

Even if you have a budget to stick to, splurges are just part of traveling. Don't let lack of money hold you back from something you've been dreaming about, like diving in the Galápagos or a taking a hot air balloon ride in CappadociaIt may be expensive, sure, but it's part of your journey. And if you want it badly enough, it's worth it.

Plan out your splurges so you're ready for them. (Include this cost in your total budget, but don't divide it into your daily spending.)

And when you do splurge, make sure it's with a ethical company giving back to the local community and environment. Read our 31 Tips for Traveling Responsibly article for more information. 

Step 6: Add on Airfare and Travel Insurance

Note that when you search for a daily budget in a particular country, it will typically NOT include airfare or travel insurance. You will have to add these costs in as well.

For airfare: We like getting airfare estimates on SkyScanner because you can search an entire month and see the cheapest day to fly. 

For travel insurance: We like World Nomads for travel insurance. Get a super quick quote here. 

And there you have it: Your own fully-customized travel budget! CONGRATS!


But we're not done with you yet, young Jedi.

Now that you've got the steps down, let's try a couple examples together...

We'll take you through the steps for one expensive country and another country that is more affordable to travel.

Let's start with a place we've never been (at least not yet!):

Example Budget: Two weeks in New Zealand

  • Country: New Zealand
  • Length of Trip: 2 weeks

Step 1: Travel Style

Since New Zealand is a pretty expensive country, our travel style will be between "budget" and "mid-range" for this trip.

Step 2: Daily Budget

For a trip to New Zealand, Budget Your Trip says "budget" travel will cost about $44 USD per day. And mid-range travel will be about $175 USD per day. Since we're somewhere in the middle, we might allot $100 USD per day, per person ($200 USD for both of us) for a trip to New Zealand.

Step 3: Preliminary Cost

If we plan on being there 14 days, that comes out to be $2,800 USD for both of us.

Step 4: Padding

Then, we add 15% ($420 USD) on top of that so we have a little "padding", leaving us with a total budget of $3,220 USD for a 2-week trip to New Zealand. 

Step 5: Splurges

In New Zealand, our splurges would be:

  • Bungee jumping: $180 per person
  • Milford Sound trip: $230 for 2 people

Step 6: Flights & Insurance

A quick search on SkyScanner tells me we should be able to find a round-trip flight from home (Minneapolis, MN) to Aukland, NZ for around $1,400 USD (give or take a bit). A standard 2-week policy from World Nomads for two of us is around $180 USD.

After adding the expenses from Steps 2, 3 and 4, we have our grand total... 

Grand Total: $6,790 USD 

What this includes:

  • Round-trip airfare for two
  • Daily spending budget of $200 USD (for 2 people)
  • Two big splurges
  • Travel insurance
  • A little extra "padding"

Now ask yourself: "Is this budget realistic for me?"

Be sure to figure out what your budget will look like in the country you're planning to visit. $100 per day in New Zealand, for instance, will be several picnic meals and not-so-luxurious accommodation. If you want to eat out more often or splurge on plush hotels, you'll have to adjust your budget accordingly.

Tip: When you're putting together your budget, don't forget to think about loans or any other expenses you'll need to continue paying while traveling. Don't forget these costs when planning your budget.


Wow, that seems pretty expensive...

Yes, New Zealand is a pretty expensive country to visit, no matter what your travel style may be. Below, we've broken down a budget for a country that's less expensive in order to illustrate that a 2-week trip doesn't need to empty your savings account.

Sample Budget #2: Two weeks in Colombia

  • Country: Colombia
  • Length of Trip: 2 weeks

Step 1: Travel Style

Mid-range

Step 2: Daily Budget

According to Budget Your Trip, a mid-range budget will be around $26 USD per person, per day (or $52 USD for a couple)

Step 3: Preliminary Cost

For 2 weeks, our preliminary budget is $728 USD for 2 people.

Step 4: Padding

A padding of about 15% more brings it to just about $840 USD.

Step 5: Splurges

Our splurge in Colombia would be the Cuidad Perdida trek, which costs $310 USD per person.

Step 6: Flights & Insurance

Round trip flights from Minneapolis to Cartagena are around $500 USD per person and a 2-week travel insurance policy for a couple is $180 USD. 

Grand Total: $2,640 USD

What this includes:

  • Round-trip airfare for two
  • Daily spending budget of $52 USD (for 2 people)
  • One big splurge
  • Travel insurance
  • A little extra "padding"

The bottom line: This is meant to be a template that you can customize to fit your needs and your travel style. 

Okay, now that you know how much money you need to save for your trip and how much you'll be spending each day, check out this article where we share all the ways we stick to a tight budget when traveling. Following these tips will ensure that you don't come home broke. 

Tip: You can also do this exercise in reverse. What I mean is if you have $3,000 USD saved up, and you want to visit Thailand, start with Step #6 and work backwards by subtracting the costs. You'll be able to see how many days a reasonable budget will bring you with $3,000 USD to spend. 


So what do you think? What will your budget look like? Do you have any questions? We'd love to hear from you in the comments below!