How to make a realistic travel budget: 50:30:10:10 method

 

 

How to make your realistic travel budget…

 

Coming up with a travel budget or a holiday budget can be intimidating- where do you start?

…And not to mention a bit dreary…

It surprises me when people discount themselves from travel because they think they have to fork out an arm and leg for it!

No, no, NO!

Often some of my most memorable and exciting trips have been when I’ve been on a tight travel budget!

…Because I’ve had to think out-of-the-box with ways I can cut my costs.

When I’ve been short on money during a trip, it’s been those times where I’ve gone to local food markets or had street food or sat in those back street shacks that only locals go to.

Budget travel is the best kind in my eyes.

Hands down!

It’s where you get those authentic, adventurous experiences that you’ll be talking about for YEARS- trust me!

When I went to India, I travelled on a rickety overnight train from Agra, the home of the Taj Mahal to the sacred city of Varanasi– certainly not a luxurious experience.  

But I wouldn’t have changed it for the world…it was entertaining and worlds away from my normal life.

Sleeping on those bunk beds shared with locals, stumbling your way to the hole in the ground of a toilet on a wobbly old train will be something I remember forever, I’m sure of it!    

Speaking of India…check out my post on mistakes to avoid when solo travelling in India HERE!

Who needs a travel budget plan?

You know what, even if you’re a millionaire, you should budget for travel.

I’m not saying don’t make the most of your trips, but I think that you can easily go the expensive, luxury route if you’re not on a budget.

What do I mean by this…

Well, if you have all the money in the world to spend on a trip, you may be tempted to go 5* all-inclusive package trip.

Although it sounds lovely…where’s the sense of adventure, where’s the fun?

You’d have everything at your feet, waited on hand and foot while you enjoy the spectacular views from your penthouse…

…actually, I’ve changed my mind, that sounds great…

Joking!

What I love about budget travel is the cultural immersion, the local experience, seeing the true side of a place!

Related posts: post about cutting costs whilst inter-railing!

Look, if you’re travelling for a long time (more than a few weeks), you’ll need some sort of budget to sustain your travels.

If you’re short on money or have an average income like me, then travel budgeting is just a way of life!

Maybe you’re saving for a house as well as saving for travelling, then a budget plan is practically necessary!

Psst…If you’re saving for a house also, take a look at my post about whether to save for a house or travel.

And…if you’re a travel bug who is constantly looking for their next trip, then a travel budget is pretty ideal for you!

If you want to take a look at how I applied this budget planning method in practice…

I have a post on this- CLICK HERE!

Related post: How to start budgeting and saving money

How to create a travel budget?

50:30:10:10 Method

If you’re trying to come up with a simple holiday budget planner to quickly calculate your budget…

…Then the 50:30:10:10 method is perfect for you!

Because who wants spreadsheets?

If you’re like me, then you can’t be bothered with all that excel stuff!

50%: 30%: 10%: 10% will help split your budget into ACHIEVABLE sections.

…AND…make your budget flexible too!

We all need a bit of flexibility!

By the end of this blog post you should have figured out:

1- How much you can afford

2- Have a place to visit in mind

3- How much daily funds you need

4- What is the total of your main costs for the trip

5- What are your overall costs, including your 50:30:10:10 split

6- How long can you go for based on this amount

Here’s your ultimate guide to coming up with your perfect travel budget…

1. How much can you spend on your trip?

This is your first major question that you need to ask yourself.

How much can you spend based on what you can save?

Another way to look at it is, how much are you willing to spend on your holiday?

To answer this question, you need to establish what is REALISTIC for YOU and then work around this.

This is very much dependent on how much you can muster up.

Struggling to find obscure ways of saving money for travel?

My post on saving money for travel tips will give you some helpful hints!

2. Choose your perfect destination

You may have a dream destination in mind?

In that case, you will need to research how much the cost of living is and the average daily expenditure in that place.

Related post: How to start budgeting and saving money

Ideal route for inter railing Europe

What is the cost of living?

The cost of living is the amount of money it takes to maintain a certain standard of living in a place.

How is the cost of living relevant to creating a travel budget?

The cost of living includes the standard price of expenses such as food, transport and accommodation.

In other words, you will need to understand how much money you will need to get by and enjoy a place!

Simply Google- “Cost of living in X”

For example, according to Lonely Planet, a trip to the UK estimates daily spending of around £55.

If this currency is foreign to you (literally), convert the currency so you get a better picture of the cost of living in a place.

For currency conversion rates, I use OANDA– it’s accurate and reliable.

What if you don’t mind where you go?

You may not mind where you go, you just want to get away for a bit.

But everyone has a travel list, a bucket list…right!?

You may even want to take a staycation!

Related posts: 7 reasons why taking a staycation will help grow your bank balance

The ideal itinerary for inter-railing Europe

In this case, I would suggest coming up with your budget amount and then choosing a location based on how much you can afford.

For example, if I am looking at going to Europe on a budget, I would consider Spain, Portugal, or somewhere like Prague if I wanted a cheap city break.

Obviously, it’s all down to personal taste and what you want from your trip.

3. How long will you go for?

Knowing what your costs are will help establish how long you can go away for.

Another way of doing this can be by looking at prices of accommodation and seeing how much it will cost you to stay for different periods.

You will then understand how long you can actually afford to go for.

Of course, booking.com is a great place to help you get a grasp of how much accommodation will be.

If you’re on a tight budget, I would suggest coming up with how much you are prepared to pay for the trip, and then planning out how much you could feasibly spend daily to comfortably enjoy yourself.

You don’t want to cut yourself too thin and find you don’t have enough money to have a good time.

Be realistic, and if anything, overestimate your daily costs so that you don’t get disappointed if you run out of money before the trip ends.

4. Calculate your travel costs using 50:30:10:10

Here’s where we get into the nitty gritty…the 50:30:10:10 theory…

5 Steps to creating your 50:30:10:10 travel budget

Step 1: Main Costs

AIRFARE + ACCOMMODATION + TRAVEL INSURANCE = MAIN COSTS

These are the costs that you just CAN’T AVOID, you HAVE to pay for these to make the journey to your holiday destination.

Simple as that!

So, the MAIN COSTS are a good place to start when coming up with the overall calculations.

Once you have calculated your main costs, think of the IDEAL amount of money you would be comfortable spending on a holiday.

For example, let’s say you are comfortable spending $1000 on your holiday and the main costs add up to $500.

So, you then have $500 to work with for the rest of the trip.

Is this achievable?

This depends on your destination and how long you want to go for.

TIP: If you find it is not achievable, you may need to adjust the number of days you want to spend away, change your location, or increase your budget.

Let’s say $500 is realistic for your short trip.

Step 2: 50%- Necessities allowance

(NECESSITIES= ESSENTIAL COSTS)

Of your left-over budget- your overall amount minus your main costs = £500 in this case.

50% of this amount should be spent on your NECESSITIES.

What are these?

 These are your necessary or ESSENTIAL purchases once you arrive at your holiday destination.

So, remember, the main costs are those that are essential for you to arrive at your destination.

Necessities: your transfer from the airport to and from your accommodation, meals during your stay and public transport.

The great thing about your necessities is that you can find ways to cut these down IF you want to.

Take a look at my blog post about cutting costs when inter railing– this goes through various ways to save money where you can whilst travelling.

Step 3: 30%- Must-dos allowance

(MUST-DOS= DESIRED PURCHASES)

The difference between must-dos and necessities is that must-dos are those things you’ve had your heart set on since you booked the trip.

Remember, necessities are the basic survival costs.

The must-dos are those die-hard things you just HAVE to do during your trip, or you won’t have felt fulfilled.

Wow…such pressure!

Let’s not forget, holidays are supposed to be amazing experiences, you don’t want to go home feeling like you SHOULD have done something.

When I visit a place, I go with the mentality that I will never return to that place again, so I have to do EVERYTHING I can!

Let’s say you go to India for the sole purpose of visiting the Taj Mahal, this is a must do!

Listen…You don’t go home until you’ve done it- that’s an order!

Must-dos can be tours, museum entry costs, theatre tickets, boat rides, whatever is important to you.

Step 4: 10-15%- Wants allowance

(WANTS = LUXUTIRES/TREATS)

Your wants can be between 10-15% based on your personal habits.

The wants are those things that are luxuries during the trip like souvenirs, an item of clothing, getting an ice cream cone.

Maybe you want to go on a shopping spree.

Maybe a few extra glasses of wine with a meal?

Things that add a bit of an extra ‘I’m on holiday feeling’ to your trip.

Step 5: 10%- Safety net allowance

(SAFETY NEW = EMERGENCY FUNDS)

Basically, your safety net comes into play when you have unexpected costs that you didn’t account for.

For example, in Nepal, I experienced extra high taxes which were added on to the end of meals or anything that I bought. They were costs that I hadn’t planned for!

When I left the Philippines, there was an exit tax in the airport before getting on the flight.

You know what, I wasn’t expecting this and had to leave the airport to hunt down an ATM in order to be able to leave the country! Nightmare!

(If you want to know about what went wrong when I was in the Philippines, check out my post HERE)

When you’re travelling you will almost always come across some unexpected things, so having the extra money there ready for something that does crop up, will make your trip less stressful and you’ll be THANKFUL for your safety net!

You may find that you don’t need or don’t want a safety net, or you may have a backup credit card/travel card in case of such emergencies.

I have a Monzo card which I can use anywhere in the world, I think it’s a great place to store travel money for trips!

If you don’t want a safety buffer…

In this case, you can add your extra 10-15% to another area where you feel you could use a bit more money. 

It is worth noting…

If you do have emergency situations where you need money fast, Western Union is a great method of being able to send and receive money overseas.

If you need a family member or a friend to send money from your home country to where you are abroad, it’s a quick and easy way of getting that money to you without hassles or extra costs.

Travel budget breakdown

So, going off $500…your travel budget will a look something like this:

Main costs	$500
Necessities	$250
Must dos	$150
Wants	$50
Safety net	$50
Total:	$1000

Travel budget tips: How do I calculate my daily allowance?

Your daily allowance will be your NECESSITIES + MUST-DOS, divided by the number of days you are going for.

For example: Necessities $250+ Must-dos $150 = $400

$400 divided by 5 = $80 per day

Once you have your daily allowance, check this alongside your cost of living research to see whether this is a reasonably realistic amount to be comfortably spending daily.

Remember, you also have your “wants” allowance which is for anything extra that you want, NOT including your daily activities and needs.

You may calculate your daily figure and find that you think you would spend more or less.

A summary of travel budgeting steps so far:

Okay…exhausted yet?

So…let’s summarise the steps you need to take in order to get to this point…

Step 1- How much can you afford?

Step 2- Do you have a place in mind or not?

Step 3- How much daily funds do you need?

Step 4- What is the total of your main costs?

Step 5- What are your overall costs, including your 50:30:10:10?

Step 6- How long can you go for based on this amount?

How do I make my own travel budget planner?

Like I said, I HATE spreadsheets and the idea of having to put one together would put me off planning a trip!

Honestly, I dislike it that much!

Maybe I’m being a bit dramatic here…as nothing would stop me planning a trip! (ha.ha)

Anyway…

Once you have an idea of how you will create your budget by going through the steps I have mentioned…

Just write your numbers down or put them on some notes on your phone.

Write down- where you want to go, how much you want to spend and what you want to do when you get there.

You can then roughly work out how much everything will cost and how much you need to save.

See, you don’t need a spreadsheet to imput every single purchase you may make.

Just write it down on a piece of paper, the old fashioned way and you’ll have an idea of how much you can spend.

Then…just go from there.

Once you’re there, keep track of your money and you won’t go far wrong!

I actually applied this budgeting method myself, have a read of how I got on!

5. Save up your travel money

Now that you know exactly how much money you need for your travel budget, you can work towards saving this amount!

Related post: How to start budgeting and saving money

How to save money for travel

Save for a house or travel?

I prefer to prepare for trips months in advance so that I have time to work towards saving.

If you want to budget yourself EVEN MORE, you could eliminate the “wants” allowance and cut down on the “necessities” allowance by travelling savvy.

You could take food with you or walk everywhere rather than taking transport (if possible).

Depending on how much you have, you could travel almost anywhere on a strict budget with little money, obviously providing you can get there in the first place!

To conclude…

You may be interested to know how I got along in implementing this budget planning method on one of my trips- take a look at my post on this HERE!

Coming up with your travel budget can take some time and research.

But once you have it prepared, you will probably find that you are able to go on holiday more, because you have learned how to plan out your costs.

Remember, a person’s budget is also unique to them!

You may think that $1000 is way too expensive for a short trip, or way too cheap!

The trick is just to be realistic and go with what makes sense for you.

This is just a simple plan to forming your travel budget, there are multiple different methods, just find one that fits!

Now, go and come up with your travel budget, get your holiday budget planner together and go on your dream trip!

If you need some useful tips on how to save money for travel– have a look at my post here!

Yours,

Holly