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Vacation Expense Planning and Downloadable Spreadsheet to Make It Easy
by Michael Harr, Co-Founder on June 13th, 2011

Across the Atlantic, they call it "holiday", but around these parts, we call it "vacation" and the average cost of our vacations each year is estimated at over $2,000 per family. Considering the median household income is a shade under $50,000, that's a pretty significant expense that warrants a good bit of attention. In this post, we'll show you how to go about planning for your vacation expenses and give you a simple spreadsheet to help you calculate what your trip will cost.

The Big Four

If you look at the cost of a vacation, there are four primary drivers: (1) transportation, (2) lodging, (3) food, and (4) entertainment. For most families, transportation means packing up the car, driving a number of hours with impatient little ones, and of course, paying a pretty stiff price at the pump to arrive at some hotel, beach house, or other rented home away from home. As for food, most of us stay in hotels that don't have a kitchen, and eating out two or three meals each day can add up to a heap of money. Finally, once we get there and have staved of starvation, we have to spend money to do something fun.

Transportation - Mode and Distance

Until the Star Trek teleporter is developed, there are only three modes of transportation - over land, in the air, or on the water. Gas prices impact all three and right now, gas isn't anywhere near "cheap". For families, over land is the least expensive by a long shot and that's why most Americans drive to their vacation destination (and why gas prices are higher over the summer). If you can afford to fly or take a cruise, that's great, but your costs will be much higher.

Lodging - Location and Amenities

When making arrangements for a roof over your head, there are two major considerations that will affect your costs - location and amenities. The closer to the action you are, the more you will need to pay. In addition, if you stay at a full service hotel, you'll pay more for the room, parking, and other hotel services such as wi-fi or breakfast. Finding a good balance between location and amenities will yield the right accommodations for your trip.

Food - Fine Dining or Maximum Calories per Bite...err...Fast Food

I've often joked that sit-down chain restaurants are all the same and most end with an appostraphe-s. The food is similar across chains and is generally unremarkable. Fast food is the less expensive option and is equally unremarkable. However, the difference in cost is dramatic. A family of four will spend between $12 and $20 for a fast food meal whereas a sit-down, appostraphe-s meal will run four to five times as much. No one can sustain fast food for every meal (heart attack, anyone?), but how you split meals between fast food and sitting down will make a significant impact on your total cost.

Entertainment - Location, Quality, and Quantity

You're at your destination, have a roof over your head, and food in your belly. Now, do something. Entertainment is the part of a vacation that matters the most. You've traveled to Orlando and by George, you're going to Disney, right? Hopefully you didn't spend all your money on transportation, lodging, and food because your entertainment dollars are what the trip is all about, isn't it?

When it comes to entertaining yourself and/or your family on vacation, you can spend a little or a lot depending on what you do. The Smithsonian Museum is free. The National Aquarium is $29.95 per person. Disney's Magic Kingdom is $82 for anyone over the age of ten. Start multiplying these numbers by the size of your crew and the numbers add up fast. As a result, when you begin planning your vacation, think about what you want to do and count the cost ahead of time.

Known Quantities - Transportation & Lodging

After going through the basics of the big four vacation expenses, it's time to start putting this together so you can go on vacation with a good sense of what it will cost and at least have a chance of staying on budget. Fortunately, transportation and lodging are known quantities and accounting for them is easy. When you book your lodging, make a note of the total costs including taxes and any fees. As for transportation, add in your airfare, cruise package, rental car, and/or gasoline costs. If you're driving, add in the mileage and current gas prices to calculate your total transportation costs.

Walking Around Expenses - Food & Entertainment

This is where many vacation budgets fall to pieces. What we want to eat at any given moment changes and what we're in the mood to do changes as well. As a result, your best option is to put together a guesstimate as to what types of meals you'll be eating and what you'd like to do while on your trip. Add all of this together and the total is your "walking around money". You might change up when you go to an amusement park or deep sea fishing or to the museum based on weather, your mood, or the kids, but the amount of money needed to pay for these things is the number that matters.

When you arrive at your destination, we suggest using cash each day. You can take it out all at once before leaving town or take money out using multiple withdrawals while away, but the total should come out to what you tallied above as your walking around money. A good practice is to set a daily budget based on what you'll be doing that day. Take the cash you need with you and when the money runs out, it's time to call it a night. If you have money leftover, you can put it towards the next day's activities.

Vacation Expense Planning Spreadsheet

To download the Vacation Expense Planner spreadsheet in Excel, click here.

One Final Note

The way we've presented vacation expense planning here is a microcosm of how we teach TodayForward subscribers to create and manage their budget. It's as simple as figuring out the known costs and then doing the best you can in handling your walking around expenses. Anyone is good at managing money one day at a time. It's when we start trying to plan for longer periods that we all get in trouble.

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