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Setting Up a Travel Budget

You might be dreaming about your next holiday in the Bahamas while surfing through Google images of the place. But while the pictures may seem tempting, let’s not forget the real world obstacles that stand between you and Shangri-La, the most evident being your budget. Yes, a step back to reality isn’t as much fun, but it’s still better than running out of money during the trip. Here’s how you can plan out a tension free vacation without having to worry about your cash flow.

Decide What Type of Trip You Are Aiming For

The first step to plan out a budget is to ask yourself what kind of trip you are aiming for. Are you travelling on a budget or do you wish to spend like a king? If it’s the latter, we suggest not cutting too many corners. The entire point of a vacation is to take a break from the hassle of daily life; being frugal on every other step can spoil the whole travelling experience.

If your budget is limiting, it would be a good idea to postpone the trip until you have saved up enough to spend comfortably. You can also consider a different destination altogether; there are many scenic tourist countries such as Sri-Lanka that cost a fraction of what more famous destinations cost.

Go From Biggest to Smallest Expense

One of the biggest complaints that travelers have while planning out a budget is that there are just too many small expenses to document. Yes, you will probably be able to find out how much your air ticket will cost through a quick Google search, but it is unlikely that there’s accurate information on how much a rickshaw might cost you.

A good way to plan a budget is to tackle the biggest expenses first as they have the highest contribution margin. This way, you won’t be deviating too much from the actual cost even if you underestimated the expenses. Airplane tickets, hotel room accommodations and car rentals are generally the biggest expenses, information on which can easily be found online.

Keep a Safety Margin

Even if you were able to plan your itinerary by the second, there will likely be a few unseen costs that you’ll stumble across. As such, it would be a good idea to keep a safety margin or a petty fund account to deal with them as they come.

A good practice is to keep your budget 10% more than the total figure you derived from the previous step. So if your budgeted costs are $10,000, add an extra $1000 to that figure.

Don’t Forget the Pre-Trip Costs

Perhaps the most common mistake that travelers make when coming up with a budget is to only include the costs incurred during the trip, leaving out the pre-trip expenses. Among the pre-trip costs you’ll be facing, the most significant are the visa fee, immunizations and travel insurance. You might also be considering specialized travel gear for the trip, so remember to include those costs as well.

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