Rita Brodfuehrer was in her 20s, recently dumped, loved New Zealand, and had a credit card in her pocket. It was the perfect financial storm. Here's a quick recap of the story she wrote about it for Forbes's "Money Fails" series: her boyfriend cut things off while Brodfuehrer was traveling in New Zealand. The country's fantastic beaches and bountiful beer tempted her to extend her vacation. She didn't have the cash to pay for it, though, and her destination was expensive. So, she changed everything to her emergency credit card. She imagined that the payments would be easy to make when she got home, but they weren't. Housing and work troubles meant she could only pay off the interest each month. Soon her balance was $10,000 in the red.

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related: New Zealand Is Expensive: How To Discover It On a Budget

Brodfuehrer spent years paying for her kiwi adventure. She doesn't regret it since the experience contributed to who she is today. All the same, she says people should not follow her example. She recommends planning a travel budget and keeping emergency credit cards hidden away. Read on to learn more about how to make and follow a vacation budget.

Step One: Saving

Experts say there are two ways to plan a vacation with a specific budget: 1) pick a destination according to the available amount of money, or 2) save with a specific destination in mind. Here are some of the pros and cons.

Saving For A Vacation To Any Destination

People who like traveling regularly prefer this method. It consists in setting aside a bit of money from every paycheck. Some sources recommend 10% and others as much as 40%. This depends on the size of a paycheck, how many other expenses people have in their daily lives, and their love for travel.

Experts also recommend setting up a travel savings account. That way, spenders won't mess up and use the funds for other expenses. People can ask their bank to transfer a certain amount to the account every month automatically. Then, they should forget that the money exists until it's time to start planning their getaway. Vacationers will be surprised at how much has accumulated in their accounts when it's time to travel. Finally, they can shop around for a vacation that costs about the same amount as they've saved.

Lack of motivation is the most significant setback to saving this way. Since people aren't thinking about a specific destination, they may feel reluctant to set aside the money or tempted to spend it on something else.

related: 10 Tips For Traveling The U.S. On A (Tight) Budget

Saving For The Dream Vacation

The other way that travelers save for vacation is by picking a destination, figuring out how much it costs to travel there, and saving until they have enough money for the trip.

Setting a specific goal, both in terms of an amount and a destination means that it's easy to get motivated. Travelers will know how much they've saved and how much more they need. They may even feel inspired to forego expenses to put more money towards their goal.

There is a downside to this saving method, though. Travelers may get so focused on their destination that they want to go without having saved enough. That's when credit cards come out and start racking up debt. When people save without a specific destination in mind, they won't feel disappointed if they haven't raised enough money to get there.

How Much Will My Vacation Cost?

Whichever way people go about saving money for travel, at some point they'll need to estimate how much their planned trip will cost. This means they'll know if they've saved enough or not.

People need to consider the following expenses:

  • Travel preparation--Passport, visas, insurance, vaccinations
  • Transportation--gas money, plane tickets, taxi rides, public transportation at the destination, parking fees
  • Accommodation--hotels, campgrounds, AirBnB
  • Food--groceries, restaurants, snacks
  • Entertainment--entry fees to museums and parks, tours, tickets for concerts or movies
  • Souvenirs
  • Contingency Fund--around ten percent of the budget

It doesn't matter whether travelers jot this down on a napkin, use an expense calculating app, or fill out a Google.doc template (like this one by Vertex 42) with their estimated expenses. What's important is to think about it and have a realistic idea of how much a vacation will cost.

The key to getting an estimate that's close to reality is thorough research into each area. Adding 10% to the total--this is the contingency fund--is the last step to finding out how much a trip will cost. Having a little extra money destined for a vacation will make it more relaxing and fun. Travelers won't have to worry about every penny they spend, and, if a once-in-a-lifetime opportunity comes up, they'll have the money they need for it.

Going Into Debt For A Vacation

A 2019 study by Credit Karma discovered that around half of Millenials and Gen Z went into debt for a summer vacation. Of these, 18% owed somewhere between $1000 and $5000. That's a lot. Of the people who had not gone into debt, 38% said it was because they came up with a budget beforehand.

Traveling undoubtedly leaves people feeling refreshed. The new sites and experiences bring joy and wonder. Going into debt to feel these sensations will shed a cloud over them. Instead of feeling completely relaxed on the beach, sunbathers may have a gnawing worry at the backs of their minds about how they'll pay off their credit cards when they get home. On the other hand, they may return from vacation completely refreshed, but then have to face a harsh financial reality. Either way, the anguish is not worth it and the best way to avoid it is with a budget.

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