Editor's Note: This story originally appeared on Living on the Cheap.
For Kathy Lopez, it’s all about the spreadsheet. When she started planning a future trip to Europe with her friends, she put every projected expense into a Microsoft Excel spreadsheet to determine how much the month-long adventure would cost.
“We’re going to save a lot of money and planning time on the road,” says Lopez, a retired city manager from Prescott, Arizona.
If your eyes glazed over when you saw the word “spreadsheet,” please keep reading. Travel companies don’t want you to make a budget. They’d prefer that you mindlessly swipe your credit card at the ticket counter, the front desk, the restaurant. You’ll spend more, and you could end up in debt.
They win, you lose.
“The key to budgeting for vacation is planning,” says Rosalyn Glenn, a financial planner with Prudential Advisors in Columbia, South Carolina. “The vacation budget should be considered in the annual budgeting process, and the amount for the budget should be determined by the resources you have available to allocate toward that line item.”
A few general rules for a vacation budget …
1. Save for your vacation
Set an amount in your household budget. “See how much each month you can save for your vacation between now and your planned dates,” says Tanya Peterson, a vice president at Freedom Financial Network, a debt-solutions company. The typical consumer spends $2,400 on travel annually, according to Bank of America.
2. Don’t go into debt
Experts agree, it’s just not worth it. “Nothing ruins a vacation like the stress of having to pay it off when you get back,” says Dan Simon, a retirement-planning adviser at Daniel A. White & Associates in Middletown, Delaware.
3. Track every detail
How exactly is someone like Lopez going to save money? Her trip from Arizona to Europe’s micro-states, including Lichtenstein, Monaco and Vatican City, could be a budgetary black hole. She listed every destination, every hotel and every activity on the spreadsheet and shared it with her travel companions.
“By doing this, we determined that a Eurail Pass would be a good idea, so we bought them on sale,” she says. “We were able to book flights on days that were cheaper. We got good prices on hotels. And we made the best use of our reward points.”
Lopez describes the process — particularly the negotiations with her friends — as “excruciating” but well worth it. They had to agree on destinations, hotels, fares and how much they wanted to spend.
4. Leave nothing to chance
Whatever you do, don’t leave anything to chance. Angela Rice, an accountant and travel adviser from Paradise Valley, Arizona, says that’s when things go off the rails.
“We require that clients be open to discussing their travel budget,” she says. “How much are you able to spend on travel? That will play a big role in determining where you will go, how long you will stay, when you will go, and what you can do when you get there.”
Rice is right. As painful — and, yes, boring — as creating a vacation budget may be, it’s essential. When people go on vacation, they tend to leave common sense at home.
I’ve watched my parents, kids and close friends pay for something they couldn’t afford while they were on the road. I think travel companies know our defenses are down and take advantage of that.
The fix is deceptively simple: Create a budget, save for your vacation, plan carefully and then stick to the plan. But whatever you do, think about how much you’re going to spend before you go. Otherwise, you could end up spending money you don’t have.