How to make a world-class travel budget

Collage of a woman leaping while trailed by a rainbow.

Influencer: “Travel is the one thing you buy that makes you richer."

Your bank account: "Nope."

If you’re hoping to jetset across the world, cost is one of the biggest barriers. From airfare to accommodation to travel insurance premiums, it seems every aspect of your trip wants to shake you down for cash. But instead of becoming daunted and letting our travel dreams die, let’s frame travel costs with a more budget-friendly and achievable mindset. While not all of us are millionaires, we can absolutely take charge of our finances and set some goals.

So without further ado, here’s a breakdown of the top travel costs to include in your budget.

Key travel costs to consider

Collage of a woman thinking about budget expenses.

Let’s get one thing straight: don’t be afraid of a budget. We tend to hear this finance buzzword and immediately think, “Poor. Restrictive. I don’t understand.” But budgets are there to empower, not hinder, your spending. All we need to do is flip our mindset. Instead of, “I can only spend this much,” encourage yourself with, “I have this much to spend.”

Luckily, the tech boffins have created some pretty amazing (and free!) budget apps to help us smash some goals. And saving for travel doesn’t have to be boring, either!

As for expenses, no budget or trip is alike. Costs will vary depending on your:

  • Destination. Where you go affects everything from accommodation and airfare to currency exchange rates and any other costs required to get there.
  • Entertainment itinerary. Paying for concerts? Wandering a museum or the remote wilderness? Whether you go cheap or deluxe, it’s nice to have something to do once you get there. Unless just staying in hotels is your jam. You do you!
  • Food preferences. Eating out or dining in? Shopping for yourself may be cheaper, but perhaps you’re going somewhere where you need to bring your own food and water. Maybe you even have a dietary requirement to consider. In any case: meal plan.
  • Personal needs. Everyone is beautifully different and will have different needs when travelling. Maybe you need to budget for medical or accessibility costs, or you need to avoid long-haul flights by paying extra for frequent layovers. If there are any little nonnegotiable expenses for you, put them in the budget!
  • Travel companions. Flying solo certainly makes budgeting easier, but taking the kiddly-winks or your partner can be fun, too. Consider who you’re travelling with and how they will impact your budget accordingly.
  • Travel agent/company/tour organiser. Pre-booked anything can change the price tag of your trip, for better or worse. But some countries will only let you in if you’re arriving with an approved travel company that sponsors your visa, so this may not be optional. Smartraveller is an excellent government resource for visa advice and other travel restrictions to keep in mind.

A good way to think about what you’ll need in your travel budget is what you need in everyday life. A place to stay, a way to get there, and nonnegotiables like food or funds for emergencies (which is where travel insurance can come in). Once you have an idea of what you need here, you can set goals for going abroad.

Example travel budget costs

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Let’s break down some example costs and how they may look in a $2500 travel budget.

Transportation

  • Example savings goal: $1,500

Planes, trains, and automobiles, oh my! Fares add up fast and can set you back anywhere from $100 domestic to $3,000 international – and that’s just economy.

Have a browse of some booking websites to gauge the rough round-trip cost for reaching your destination, including any luggage, food, or seating costs. Keep in mind the time of year, too, and avoid flying at peak periods like Christmas or summer holidays.

Also, consider how you plan to move around once you land. Will you be riding public transport, hiring a car, or flagging down taxis? Research some local reviews for cost/safety recommendations so you’re not left stranded and budget accordingly. 

Accommodation

  • Example savings goal: $300

Hotel or hostel? The classic traveller conundrum. Hostels can be budget-friendly but not necessarily the nicest (or safest) option. Meanwhile, even two-star hotels can fleece you upwards of $200 a night. What do??

Have a browse of accommodation options at your destination, including AirBnBs or room-lets, to get a sense of price. Consider how many nights you plan to stay and whether you can afford an emergency stay in case your flight gets cancelled. 

Food

  • Example savings goal: $300

Everyone’s gotta eat, so have a think about how you plan to feed yourself while overseas. Some countries have incredible cuisines to try, so eating out once or twice could create some incredible memories. But then again, sometimes a simple grocery shop at the local market and home-cooked meal in your AirBnB is more affordable.

Aim for a variety of options and consider any dietary requirements, preferences, and resource constraints you may have. For example, if you plan to cook, you’ll need facilities to prepare, eat, store, and dispose of food. If you plan to eat out, look up some options and consider pre-booking any venues to control your spend. Consider food safety issues, too, as some destinations may require you to BYO meals.

Entertainment

  • Example savings goal: $200

We don’t travel to be bored, after all. Experiencing another country’s magnificence and culture is one of the great joys of journeying abroad, so research what you’d like to do once you get there and if there are any fees. Maybe you wanna check out some live music and see the sights. Or maybe you’re just there to backpack the wilds. Either way, go for whatever sparks your imagination and excitement: this is how you motivate yourself to save. 

Hot tip: invest in experiences, not souvenirs. (Though there’s certainly nothing wrong with a little keepsake or two). 

Emergency cash

  • Example savings goal: $100

Left out of most budgets is the “break in case of emergencies” fund. This is the cash you keep on hand for surprise delays, cancellations, medical emergencies, theft, and other misfortunes. $100 is pretty bare minimum, too, so while it’s never fun to think about, consider how much money you may need to get out of a bind, and whether travel insurance could help offset the costs. 

Travel insurance

  • Example savings goal: $100

Another oft-forgotten but non-negotiable item. If you can’t afford travel insurance, you can’t afford to travel. Especially if you’re travelling on a budget, the right policy could help cover unexpected costs and keep accidents from wrecking your bank account. 

When comparing policies, make sure you weigh up not just the premium but the coverage, since it’s no use dropping $20 on a cheap policy that won’t cover you adequately. Read the PDS to see what’s included or excluded and avoid these 5 common mistakes

For more information on why travel insurance is so important, check out our comprehensive guide.

How to set savings goals for travelling

Collage of a woman dreaming about summer travel experiences.

Whenever you set savings goals for your travel budget, it’s important not to become demotivated or carried away by fantasy. Instead, set SMART goals: Specific, Measurable, Achievable, Relevant, and Time-Bound.

  • Specific: know exactly what you’re saving for and why. This is where research and budgeting comes in handy.
  • Measurable: your goals aren’t vague or wishy-washy. “I need $X for food, minimum.” Luckily, budgets make this very easy. It’s all just numbers!
  • Achievable: the goal is realistic for you. There’s no point in aiming for $6,000 in hotel fees if you can barely set aside $200 a month in savings. 
  • Relevant: the budget item actually matters for your trip. A clothes shopping budget might not suit your voyage to Antarctica.
  • Time-Bound: deadlines are a must! If there’s no end-date to your savings goals, you won’t be motivated to stick to them. Peg your saving due dates to fixed targets like ticket bookings or vacation days to stay honest.

Once you’ve set some SMART goals for your travel budget, your journey begins! Bon voyage.

Got wanderlust? Compare travel insurance policies below.

Compare travel insurance policies - last updated 11 August 2022

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