How To Build A Budget For Holiday Travel

As the holiday draws closer, we’re planning everything from entertaining to gifts to travel to visit friends and family. Whether we’re taking a solo vacation over the holiday season or using the time to celebrate the holidays with others, holiday travel is a big part of our holiday budgets, which requires planning ahead.

The first step in preparing for the upcoming holiday travel season is to estimate a holiday budget and set aside the needed money.  It is no secret that inflation is going to have a big impact over the next few months. “Prices are already high and the holiday season could further exacerbate the supply chain issues leading to even higher prices for holiday related items. It is also expected that we will be in a recession by the end of this year,” says Snigdha Kumar, who works as a personal finance expert and head of product at Digit.

Considering all that, planning ahead to budget for the holiday season becomes so important. The first step is to estimate how much you can afford to spend on the holiday season this year. “You can start with using last year’s expenses as a benchmark and adjust it based on your current financial situation. If you want to go more granular, you can create an itemized list of all expenses and their current costs, including costs of transportation, gifts and accommodation,” says Kumar. Once you have a budget, start saving up and setting aside money for this goal. Kumar says this means ideas like setting aside a fixed dollar amount every month or using apps like Digit to set a goal and save automatically without having to stress about reaching your goals.

Reduce gifting expenses

One way to plan ahead for the holiday travel season is to spend less on other areas, including gifting. This year, one idea could be to create a DIY gift. DIY gifts are not only inexpensive but are also a great way to make something unique and show that you care for your loved ones. “If you want to buy a gift for your loved ones, you could also plan to buy them during the many sales that happen between now and the holidays,” says Kumar.

It’s a way of setting expectations with family and friends about this year being different when it comes to gifts. It could also relieve them of the pressure of holiday gifting and make the holidays more enjoyable for everyone. (Chances are, if you’re worried about money this year, so are your loved ones, as everyone is feeling the inflationary pinch.) 

Make your travel plans ASAP

Peak time travel has always been expensive, but 2022 has been especially expensive for travel in general given high post pandemic travel demand, higher gas prices and labor shortages. All these factors may make everything related to holiday travel cost more than usual.

“Consider picking dates and booking flights and hotels right now for the holidays. You can also consider looking at deals for your travel plans,” asys Kumar. Many websites give you deals if you book your flights and accommodation together. You can also look at using deal websites like Rakuten to get discounts and cashbacks on your travel purchases.

Identify big-ticket items

What’s important to you: Staying in a luxury hotel, taking fun excursions with family or friends, or eating at the best restaurants? Only you can decide. But here’s the thing: You have to decide now. “Make those decisions first, and then plan the rest of your vacation around those items,” says Catherine Miller, Certified Financial Planner and wealth advisor at Bartlett Wealth Management.

Do your research

This includes estimating your expenses for accommodations, meals, and transportation. “For meals, expect to budget more if you are staying in a hotel and eating out for every meal,” says Miller. 

It’s also helpful to look for hotel rates on sites such as booking.com, expedia.com — a great alternative is VRBO or AirBnb. Don’t forget to build in a buffer for pre-trip expenses like visas, travel insurance, souvenirs, and vaccinations. “Once you’ve worked out how much you need to save, use online tools to set up special purpose budgets for excursions and other activities,” says Miller.

Traveling during the holidays can create the best memories of a lifetime, but it also has some budget pitfalls.  “My first rule of travel planning is creating a realistic budget that you can afford,” says De Anne Combs, a fashion and travel expert and  the co-founder and development director of La Peony, 

Consider packages

Booking a travel package that includes airfare, hotel and transportation can be a big money saver.  “I usually check out package prices from Costco Travel, Kayak, and all the major travel websites to find the best deal,” says Combs.

Make sure to check the final cost and what is not included in the package.  “Are local taxes, surcharges, booking fees and resort fees included?  If not, add those in. All-inclusives may appear to cost more initially, but they can truly protect your budget since the price you pay is fully known upfront,” says Cobs.  If an all-inclusive is not your thing then make sure to add meals, groceries, transfers, and any excursions to your budget. Stopping by the grocery store or warehouse club to pick up snacks, drinks and breakfasts or lunches can really help you cut down eating out costs.  Do your homework before you go so you know exactly where to stop when you get there.

Consider where you can be flexible

If you are traveling to family/friends then your locale is set.  “You can price out different transportation options – flying vs. driving or riding the train.  Many destinations have several airport options you can cost out.  Don’t forget to look at saving money by flying on an off day or time, if your schedule permits,” says Combs. Will you stay with family, at a hotel or VRBO? Can you get together with friends/family and share a condo?

Make sure to go the extra step of checking out what you will do when you get there.  Find out what there is to do and what it costs before you go. Are there museums, amusement parks, zip lines, day trips to national parks, snorkeling cruises, walking tours, etc?  Add these costs, including tips to the tour guide to your overall budget.

Also, try to fly on weekdays whenever possible. Weekends are the most requested, so they will also be the most expensive. “If travelers can choose the days of the week, opt to choose weekdays even during the holiday season,” says French Bee’s Commercial Director Sophie Hocquez. 

Choose carriers where hyper-customization and flexibility are key. Plan trips with affordable airlines that offer a la carte services. “This means you can book a base fare and customize it to only pay for what you need according to your budget,” says Hocquez.

Ultimately taking the time to make a holiday budget will actually make the travel experience better all around. “Depending on what your priorities are, budgeting gives you a structure to save for your vacation and to plan out all the details you want to incorporate into your travel so you can enjoy your trip stress-free,” says Miller.

READ MORE:

• Prices Are Climbing—Here’s What To Do Now To Prepare For The Holidays
• How To Get The Possible Price On A Flight In 2022
• Is Now The Time To Book Travel For 2022 + 2023?
• Book Christmas Travel By Dec. 9 And Other Money-Saving Holiday Travel Tips