I have more leeway when it comes to going on holiday now than I did as a broke uni student. Don't get me wrong, I'm still a penny pincher and I love a good deal. However, I have a little more to work with now so I can book my own room instead of sharing a small hostel room filled with bunkbeds and 12 other poor university students.
But, I'm still really strict about how I spend my money and I still budget my holidays. I mean, I also put shopping and food on a high pedestal so I have to make sure there's enough money to go around.
I thought I would share my thought process and method for budgeting my holidays and for keeping track of my spending.
HOW MUCH MONEY DO I HAVE?
What can I afford to spend? I like to honestly ask myself what is the absolute maximum I can spend without risking losing my car or having to sell a kidney or sacrifice being able to go on a second holiday. This is obviously the most important item when it comes to planning a budget. [If you want, I have some tips for traveling affordably and 50 ways to save money.] Once I know my spending limit, I set this money aside specifically for this trip. Otherwise, I may be tempted to spend it on frivolous items.
WHERE AM I GOING AND HOW EXPENSIVE IS IT?
Most of the time when I'm booking a trip, I just use the 'explore' option of Kayak for inspiration and I'll just pick a cheap (but interesting) place. If I have a specific destination in mind, I'll look into cheaper times for visiting, like the shoulder season or even the low season. The point being, I do some actual searches to figure out what the big ticket items - like lodging and transportation - will cost.
I use skyscanner or kayak to gauge the cost of flights and hotels. Is it an option to stay in (a private room in) a hostel? What about using a rental by owner (like airbnb or vrbo). I also consider other big expenses; will I need a rental car and how expensive is petrol?
How expensive is the destination itself? Are all of the restaurants really pricey or will I be able to find affordable eateries? What about tipping customs? For this sort of research, I like using wikitravel and tripadvisor.
If I'm traveling internationally, I check what is the foreign currency exchange like. If the rate is in my favor, great. If my money is weak, I'll be spending more on incidentals and food and hotel so I either scrap the idea or make more of an effort to save extra cash for the trip.
If I can't afford the trip I'm brainstorming, I check if I can use frequent flier or loyalty points to make it work. If that fails, then I pick a new destination; obviously I go for one that's less pricey.
SAVE AS MUCH AS I CAN!
Even if I've found an amazing steal of a vacation, I still make an effort to look for deals - promo codes, package deals - and read reviews on hotels and airlines because a deal is not worth it if the hotel sucks or the airline is notorious for canceling flights.
KEEP TRACK OF EXPENSES!
The second most crucial step (after determining my maximum budget) is to lay it all out in a spreadsheet. If I'm traveling in a group, figure out the "per person" cost to gauge how well I've budgeted. [I use a Google Spreadsheet so that I can access it from anywhere, you know, just in case I decide to book something on the go and want to add it to my sheet.]
Once I can make my expenses match my budget, then I go for it and grab my credit card and start booking.
One last tip! Be careful when booking in foreign currencies; I always use a fee-free card. And I never let the website do the conversion for me because the site use a poorer rate than the credit card company will.