how to estimate travel expenses

Determining the budget is definitely not the most exciting aspect of travel planning, but it is crucial to successful planning. After all, who wants to come home from vacation to work six months to pay it off?

Monthly vacation savings plan

A rainy road trip to Nashville, TN... this time by car.

To make budgeting a vacation easier, consider creating a savings account just for vacation. Check with your bank or credit union to see if they offer a fee free, interest bearing vacation savings account. Alternatively, set up an account through an FDIC insured online bank such as INGdirect.* Setting aside as little as $25 per month provides $400 toward vacation expenses each year. Whatever you save in advance to apply toward vacation is money you won't put on a credit card or take from savings or a home equity line. No vacation debt after you come home just might be the best "souvenir" of the whole trip!

Trip specific estimating

Once your finances are in order, it's time to plan a specific trip. How exciting! If you read the previous blog post, you know where you want to go. Let's look at expenses to make sure you get the most bang for the buck. The first step is to do some vacation specific research to develop a working budget. Resist the urge to book tickets or reserve a hotel at this point. This is the planning budget -- to maximize your investment in your vacation. The internet makes budgeting a vacation easy.



Travel - How will you get there? When I plan a vacation within a one day drive of home (10 car hours), I compare the cost of driving to the cost of flying. Of course, the more people who go, the more expensive flying is.

To estimate the cost of driving (You'll consider other factors later, such as wear and tear on the vehicle, sufficient size for your travel needs, etc. This is simply an estimating budget.):

• estimate the cost of gas for the trip
• determine the number of miles you will travel (mapquest provides a good ballpark figure)
• divide the number of miles by your car's mpg (the number of miles you travel per gallon of gas)
• multiply that answer by the current cost of gas per gallon
• Example: 500 mile roundtrip. Divide by 20 (the average mpg for your vehicle). The answer 25 represents the number of gallons of gas you need for the trip. Now multiply 25 by $4.00 (the current price for a gallon of gas) to determine your general vehicle expenses. 25 X $4 = $100.
• Formula: M (miles round trip) / mpg X $price of gas/gallon = Total cost of gas for the journey to and from your destination.
• eating on the road:
• as a general rule, figure $20/person per day. If traveling with teens, increase that budget to $25/per person per day of travel to and from the destination.
• hotel lodging:
• if the trip will take longer than a day, factor in the cost of a hotel at $75/room per night needed (there and back).
• parking:
• do you have to pay for parking at the destination? If traveling to a major city such as Washington, DC, NYC or San Francisco, factor daily parking at $20/day for the duration of your stay.
• Total each of these categories to estimate the cost of driving to and from your destination.

For airfare:

• Calculate round trip tickets within your half of the country (east or west of the Mississippi) at $300/person. 
• Calculate round trip tickets across the country at $500.

Bus and train travel can also be considered, depending on location.

Of course, some destinations are too far away to drive and flying is the only real option. We'll talk about saving money when flying in a separate post.

Lodging - Hotels are the logical first choice for lodging. I search hotel sites such as travelocity when making initial plans for vacation, but I don't book until I consider all the options. Knowing the general price of hotel lodging during my dates of travel helps me set a more accurate budget and weigh other options. 

Other expenses - What do you plan to do on vacation? Consider set costs for your destination such as (this list is not exhaustive):

• Theme park tickets
• Other entertainment (Broadway shows, the opera)
• Museum tickets
• National park admission fees
• Ferry costs
• Bike, kayak or other adventure costs
• Mass transit (subway or metro)

Dining - While you might not be able to budget food costs exactly, you should be able to determine approximately how much food will cost on your trip. Look at theme park restaurant menus or perform an internet search of restaurants at your destination. A "foodie" road trip might want to increase the food budget by 20% just to be safe.

Estimating major expenses in this way will help you determine whether to drive or fly to your destination and what type of lodging to consider. We'll look into these topics more closely in future posts.

Bon voyage,
Karen

*Mentioning INGdirect in this post is not an endorsement or recommendation. Speak with your financial advisor about your specific financial situation.