How to Plan a Family Vacation on a Budget

Planning a family getaway can be fun and exciting, but it can also be stressful. In fact, one of the biggest challenges in planning any vacation is creating and sticking to a budget. Without a budget, there’s a risk that you’ll overspend and pay the financial consequences when you return home.

At Addition Financial, we believe in providing our members with financial tools and advice for every aspect of their lives, including vacations. With that in mind, here is our guide to how to plan a vacation on a budget.

Why Create a Vacation Budget?

Why should you create a vacation budget? It turns out that there are many benefits to doing so. Here are a few to consider:

You’ll save time planning. Even if you already know where you’re going, the choices can be overwhelming. Having a budget in place makes it easy to narrow your choices and find options that will work for you and your family.
You’ll make better choices. It’s easy to be tempted into spending more than you can afford. You’re less likely to plan a vacation that’s out of your reach if you have a budget in mind before you start planning.
You’ll avoid post-vacation regret. If you let go of all caution while you’re traveling, you may arrive home to high credit card bills and a mountain of regret. Budgeting ahead of time will help you get a handle on what you can spend and help you make better choices while you’re on vacation.

You’re a lot less likely to go overboard with vacation spending if you know what you’ll be spending and stick to the budget you create.

How Much Does the Average 1-Week Vacation Cost?

It can be difficult to make a budget if you don’t have a handle on what the average vacation costs. You may want to spend more or less than average but it’s still helpful to have a benchmark in mind.

In total, Americans spend just over $1 billion per year on summer vacations. A one-week trip for one person, including transportation, lodgings, food and entertainment averages just about $1,500.

If we assume the same average travel cost for each family member, the cost of a one-week trip for a family of four would be $6,000. However, it is possible to travel domestically for far less than that with careful budgeting and planning.

When Should You Start Planning a Vacation?

A big part of vacation budgeting is vacation planning. Planning is essential because it allows you time to research the most affordable flights, hotels and rental cars.

For a special family vacation, we recommend planning up to a year in advance but no less than six months in advance. Here are some of the reasons why:

You can start setting money aside (if you haven’t already) to pay for your vacation expenses. Addition Financial has a Holiday & Summer Savings Account to help you!
You’ll have all the time you need to find the least expensive flights and hotels.
You can use the time to research your destination and determine which activities you want to schedule.
You’ll have time to renew or apply for passports if you’re traveling internationally.
You can study the local language and culture if that’s necessary.

We’ll provide you with some pointers to help you use your planning time to get the most from your holiday budget.

How to Create a Family Vacation Budget

Let’s walk through the steps to create a budget for your family vacation.

Decide How Much You Can Afford in Vacation Expenses

The first step is to determine what you can afford to spend. You should determine your maximum budget first–you can always spend less if you find great deals–and work backwards from there.

There are two easy methods you can use to determine your maximum budget:

Look at your monthly budget. If you can afford to set aside $300 per month for a year, that would mean your maximum budget would be $3,600.
Look at your annual income. Those who have enough income to be comfortable calculating on an annual basis can look at what they earn and use a percentage to determine how much to spend. For example, someone who earns $150,000 per year might be comfortable spending 5% of their budget, or $7,500.

The amount you choose will serve as the foundation for the detailed vacation budget you create.

Pick a Destination

Your destination is the next decision to make because your travel options may be limited based on your budget. You might not be able to afford an international trip but you may still have your choice of domestic destinations.

During this stage, it will be helpful to do some basic research into flights and hotels. You don’t need to book a flight too early but you should have a rough idea of how much it will cost to fly to your destination if you’ll be traveling by air.

If you plan to drive, then you’ll need to factor in the cost of gas and stops along the way, as well as wear and tear on your car.

Plan for Your Biggest Expenses

Most of your vacation spending will be in three categories, so your next step should be to think about how much to spend on these things:

Transportation to and from your destination
Accommodations
Transportation within your destination

Getting to your destination may involve air travel. Accommodations may include a hotel, a resort or even an Airbnb rental.

In some cases, transportation within your destination may not be necessary. However, if you plan to rent a car or take day trips, you should factor those expenses into your budget.

It’s at this point that you should start your research. You know where you’re going, so searching for affordable flights and hotels is the best way to set budget amounts for your largest expense categories.

Keep in mind that you may be able to find deals that include all your major expenses, including a flight, a hotel and a rental car. Looking for package prices can help you save money on your total expenses.

Factor in Small Expenses

Next, you’ll need to think about smaller expenses. These may include the following items:

Meals
Sightseeing
Transportation (other than a rental car; for example, public transportation)
Entertainment (admission to events and local sights, shows, etc.)
Souvenirs
Pet sitting or house sitting expenses

We suggest breaking each of these categories down. For example, if you’re planning a family trip to Orlando and staying in a Disney resort, you probably won’t need to factor in transportation, but you will need to include a multi-day pass to the parks you plan to visit and the cost of food and drinks in the parks.

Total Your Expenses and Review Your Budget

Finally, you should total everything and make sure that you are within your target budget. It’s at this point that you can revise your numbers or, alternatively, increase your savings goals to accommodate your plans.

Tips to Save Money on Your Family Vacation

Before you create your family vacation budget, it may be helpful to have some tips about how to save money and stay within your budget:

Use tracking tools for planning. Apps such as Hopper, Kiwi and Skyscanner can help you get a handle on average costs and get notified when airfares decrease and you can get a deal. You can also use them to track and book hotels and rental cars.
Look for package deals. As we noted above, it’s possible to save money by shopping for package deals that include airfare, hotel rooms and a rental car. You may also want to shop for airfare + hotel deals or hotel + car rental deals.
Be flexible with your travel. Flexibility may not be an option but if it is, you can save by flying in the middle of the week or going to a different airport.
Consider Airbnb. As a rule, Airbnb prices are lower than hotel prices and may include amenities such as a kitchen and a laundry room.
Cook instead of eating out. If you do rent a house or an apartment instead of staying in a hotel, you can buy groceries and cook some of your meals. Cooking is almost always less expensive than eating in a restaurant.
Do what the locals do. Places that attract tourists often come with a built-in “tourist tax” that can bloat your budget. We’re not saying that you can’t see the sights, but mixing some off-the-beaten-path activities with your standard tourism can help you save money.
Take advantage of freebies. Depending on where you’re traveling, you may be able to find some free entertainment. A lot of cities in the US offer free summer concerts and movies, as well as street fairs and festivals.

These tips can help you have a great time without blowing through your vacation budget.

Everyone needs a vacation and family vacations can be expensive–but that doesn’t mean they need to be out of reach. The tips we’ve included here will help you create a budget for your family vacation that allows you to enjoy your time away without financial stress.

Are you ready to start saving for your next family vacation? Addition Financial is here to help! Click here to open a Holiday & Summer Savings Account today.