How to budget for your first big vacation

Vacations can serve as a relaxing reward for accomplishing a career milestone, meeting a financial goal, or celebrating a life change. However, the last thing a vacation should do is add stress to your life upon your return.  

Recent data suggests that travel prices are on the rise. A family of four can travel to The Happiest Place on Earth and will pay $11,000 per week, on average. As a dream getaway gets pricier, it’s important to budget wisely and prepare far in advance.  

Let’s break down some important tips for budgeting for your first big vacation, and important steps to prepare your finances before your departure. 

Decide on a travel budget first 

When planning your trip, the single most important step is building a vacation budget. The last thing you’ll want to return home to is unmanageable credit card debt or high-interest loans used to pay for your trip.  

Again, you never want to go into debt to make your vacation happen. However, this doesn’t mean using your credit card for vacation spending is off limits. In fact, it can be a good idea to rack up points while traveling! The important thing is making sure you have the funds available to pay off the credit card upon your return. 

When building your budget, first research ideal destinations, noting the cost of travel, room and board, and any activities you’ll take part in. Build out a comparison of destinations and their total costs including fixed, variable and emergency expenses. 

• Identify fixed costs: Research the basics of travel including flight costs, baggage fees, and hotel stays. 

• Estimate variable expenses: This includes meals, activity tickets, souvenirs, and additional travel expenses. It’s important to estimate the costs of ATM fees, fluctuating gas prices, and tips when calculating these variable expenses. Some experts recommend increasing this final line item by 10 to 20 percent to cover unexpected expenses you may encounter.  

• Don’t forget a vacation emergency fund: Emergencies happen when you least expect it – yes, even on vacation. It’s smart to set aside funds for emergency medical bills, especially for trips involving physical excursions. Don’t forget, even with health insurance, you may be charged with out-of-network costs when traveling.  

Consider cost-saving options 

Once you’ve come up with a baseline budget for your dream vacation, take a look at ways you can save money on your trip. First, look at travel dates. You may be able to get a good deal on airfare by being flexible with your departure and return dates. Additionally, planning your trip during the destination’s “shoulder season” — the  period between a region’s peak season and offseason — is a budget-friendly way to travel, while still enjoying optimal weather.  

Taking advantage of all-inclusive packages is another way to cut vacation costs, and stay on budget. When meals, drinks, and activities are bundled, you’ll be less likely to overspend on the variable expenses mentioned above. However, it’s wise to adequately research what is included in these packages and weigh the likelihood of participating in activities and the dining options offered. If daily scuba diving excursions are part of the package, but deep-sea adventures make you queasy, it might be more cost effective to forgo the all-inclusive deal. 

Lastly, consider adding free or low-cost local activities to your travel itinerary. Online travel websites, like Atlas Obscura, are a wonderful resource for finding local, unique attractions, dining favorites, and listicles for nearly any travel destination! Don’t forget, walking tours are a great way to immerse yourself in the local landscape and culture, and make memories that last a lifetime. 

Start saving in a separate vacation account 

The second you get the travel bug, start planning. The longer you have to save up, the less stressful it will be. Automatic transfers are your best friend here. Open a separate high-yield savings account specifically for your vacation fund. Or, if you’re an Empeople member, open a separate savings share dedicated to your trip.  

From there, count back the number of paychecks you’ll receive until you leave. Divide your travel budget by the number of paychecks, and set up direct deposit for that amount every pay period. You won’t even have to think about moving money every month, and you won’t miss the extra cash, as it’s moved into your dedicated savings before you can spend it. 

Before you jet off 

You’ve saved for months, and now it’s finally time to enjoy your travels. A week before you leave, there are a few final steps you can take to ensure access to your funds while abroad. 

First, you’ll want to research the debit and credit card policies of your financial institution. If you’re traveling to a country on the Office of Foreign Assets Control (OFAC) list, your debit and credit cards may be declined. Talk to a service representative at your financial institution for other payment options.  

Before you leave your home state, contact your financial institution to tell them you’ll be traveling. They’ll need to notate this information to mitigate the chances of your cards being locked due to suspected fraudulent activity. They’ll need every state and country you’ll be passing through, as well as the dates you’ll be gone. At this time, confirm the phone numbers and email addresses listed on your account are correct. The fraud department would use the information they have on file to confirm purchases before your card is locked. 

Pro tip: Give yourself a few extra days when providing your travel period, you never know when a flight will be delayed. Also, don’t forget to list any states or countries you’ll have a layover in, so you can safely purchase something at the airport. 

Lastly, you’ll want to upload your debit card and rewards credit cards to your digital wallet. Carrying a digital wallet decreases the risk of theft, and lightens your load during activities.  

The majority of the world is equipped to take contactless payment, and in fact, it is preferred over swiping! All Empeople Visa® debit and credit cards are compatible with Google Pay®, Apple Pay® and Samsung Pay®, which you can easily set up on your phone’s mobile wallet in under five minutes. We still recommend bringing physical cards and cash on your trip which can stay locked in your hotel.  

Vacation planning can be made simple when you have a clear budget and savings plan. It’s all about deciding what you’re comfortable spending on a trip, and sticking to that budget. If you have any questions regarding debit card, credit card, and mobile banking access overseas, please contact our member service center at (800) 338-6739, or by sending a secure message.