Revising my travel budget

There is currently $400 in my vacation savings account.

So far this year, I have taken the following trips:

  1. All-inclusive resort in January and a side trip, at a total cost of about $2,100 (all but about $270 was paid for in December 2011)
  2. Sports tournament trip in February at a total cost of about $880

I am planning the following trips for the rest of this year:

  1. Weekend trip later this month at an estimated cost of $800
  2. Week-long trip in June at an estimated cost of $1,500
  3. Weekend trip in August at an estimated cost of $500
  4. Week-long trip in January at an estimated cost of $1,200

Total estimated cost for this year including the trips I’ve already paid for: $5,150

My vacation savings account started at $1,180 at the beginning of January, which means that it needs to be funded with about $3,970 to get through the year with my vacation plans. I’ve put $500 into it so far this year ($250 at the end of January and $250 at the end of February). I’m going to increase this amount to $3,470 / 10 = $347 and round up to $350 per month for the rest of the year to cover all of the vacations that I have planned.

Last year, I spent nothing on travel, so my vacation savings account accumulated happily at $166.67 per month and some minimal interest. Since I have decided this year that taking vacations is really important to my sanity, I’m accepting that is going to cost more money than the $0 I spent on travel last year. This is obviously going to reduce the amount that I can save towards a down payment, but I would rather put off buying a place for a few months and take more vacations than buy a place sooner. We’ll see how I feel about that after the June trip.

I’m not really a huge fan of having sub-accounts for budget categories – it just doesn’t work for me. So at this point, travel is essentially a budget category and I’m going to move it into my regular budget instead of being separated into savings. This means that I’m going to transfer that $400 from my vacation savings account to my checking account, where I keep my monthly budget and cash flow amounts. One of the nice things about the way I run my budget is that if I go over in one category, there is generally enough slack in one or more other categories within my checking account in addition to the reserves I keep in my checking account so that I will never overdraft.

There. Now I feel much less stressed out about my travel spending. The amount I had budgeted was really not in line at all with the trips that I want to take and that was starting to stress me out.


18 thoughts on “Revising my travel budget

  1. I have sub accounts only for savings categories: vacation fund, emergency fund accounts, down payment fund accounts. I never know how much to put in them though.

    • I’m starting to feel like travel is a spending category since I’m planning on it fairly short-term. If I was saving up for a really big trip in a few years, that would be savings, but all of these trips are this year. I’ll see how this experiment goes in a month or two.

      I’m definitely keeping the sub accounts for my down payment,vmy emergency reserves, and my next car fund though since those are more mentally separate to me.

    • Very true! I don’t think I expected it to add up to quite that much and they’ve all gone about $100 or so over budget so far. Oh well, I’ve enjoyed them :) Hope you’re enjoying your vacations!

  2. Interesting timing for this post…I recently did the same thing! Perhaps your budgeting style is influencing me! At the start of this month, I switched our vacation budget from a savings category to a monthly line item in the budget. It makes it much easier for me to calculate long term net worth progress (I don’t count ST “save to spend” in that total, e.g. vacations, large consumer goods purchases). It also makes me feel more honest in terms of how I’m progressing and enables me to more easily categorize spending in advance of the vacation itself. For months where I don’t have direct travel expenditures, I create a “travel float” line in my ST savings so that the money is still set aside. The best part is knowing I have X dollars to spend and not feeling guilty when I subsequently spend them on a trip!

    • I like the phrase “ST save to spend”! That’s exactly what travel “savings” is to me. I do include my checking account balance and short-term “save to spend” amounts in my net worth (that’s the Cash category and it fluctuates every month depending on how exactly I spent money), but I can see the argument to not do so.

      Your “travel float” line sounds very similar to how I track budget items that don’t happen every month :) I’m going to talk about my April spending plan and explain more in detail how I budget then. But I have some budget categories that their leftover amounts roll over to the next month/indefinitely, which is how my travel category will work for sure.

      I absolutely love having money “set aside” for traveling! That definitely helps with the guilt feeling that I too experience. I’ve found that giving every dollar a purpose makes me guilt myself about spending my money almost not at all, which is so amazing.

  3. I don’t have a budget for traveling, but I probably should. Travel ends up being a large item for me every year for a couple of reasons. One, because I usually go home for a few weeks once a year when I get vacation. Two, because being in the Middle East puts you very close to everything.

    I should make a budget so I don’t get carried away when it comes time to travel. In the past I’ve tried to keep it within limits, but I usually go over :-(

    • If you have a budget at all, I think you should have a budget for traveling, especially if it is a large item. I have gone over my forecasted limits for all of my trips so far this year, by about $100 per trip regardless of the trip cost. But I think that setting the limits and thinking about them helps to reduce how much I will spend overall or at least makes me conscious of it when picking hotels, flights, etc. I mostly just spend whatever one I’m out of town, but at least this way, I have somewhat of an idea of how much the trip will cost and where the money is coming from.

  4. I recently did a similar analysis for our Cars savings account, but I went into a bit more detail because we aren’t willing to draw the money we need from other accounts if we had a deficit. I’m glad I did because it turned out we really needed to front-load our savings to that account. Our savings need to start around $320 now but can decline to about $120 by early next year. I did a quick sketch with the numbers you provided above and it seems that you may have to draw as much as $500 from another source for your June trip. Is your budget slack enough to cover that?

    • Are you guys looking to buy a new car this year? I used to keep a spreadsheet for each savings account tracking how far away from the goal I was, but I’ve gotten away from that as my goals have gotten larger, which is partially how I ended up in this situation with my vacation savings account. (The other part is mostly that the original amount I was funding was completely random, making it a good chance that it could be way off.)

      You inspired me to create a travel balance forecasting worksheet in my Excel spreadsheet.

      I’ve already booked and paid in full for my flights and hotel for my June trip. My live balance in my travel line item in my budget is currently at about -1,500.00. Based on my projections for the June trip, I will hit a positive balance with the September paycheck deposit. The August/January trips are not definite (they’re complete guesses), so those may or may not happen. I definitely have the vacation time for that though.

      My budget is slack enough to absorb the 1,500.00 overage. Right now, it looks like I have about $800 in spare cash flow out of next month’s paycheck that will go to condo savings. I keep the following in my checking account:
      1) Deductibles (auto, health, renter’s)
      2) Two months’ expenses (~$7,200)
      3) Rolled-over/floating amounts from last month’s spending plan
      4) Money from my paycheck direct deposit to cover this month’s spending plan

      I have some budget categories that don’t roll over (e.g. entertainment and food). Whatever extra money in my checking account beyond the expected balance (rolled-over/floating amounts from last month) goes to the savings snowball. Depending on what went on in my checking account in a particular month, this amount can add up to $1,000, but is usually under $300.

      Some of the rolled-over/floating amounts add up to over $1,000 (yearly or less-frequent items like sports fees, income tax prep, vehicle tab renewal, domain registration, TiVo, car maintenance, driver licensing and passport replacement, cell phone, computer, and iPod replacement, Christmas presents, etc.), which makes me comfortable with letting other categories (like clothing sometimes or travel now) go into the negative since overall, the balance is positive and I have no chance of overdrawing my checking account.

      Wow, my system sounds incredibly complicated now that I try to explain it, but it seems quite simple in my spreadsheet… Maybe it’ll make more sense after I post my a picture of my April spending plan in the next couple of weeks.

      • I had to read it a few times but I think I get your system now! I think the visual would be very helpful.

        We are not saving for our next car yet. Our Cars savings account is for insurance, taxes, fees, permits, and repairs. I think we’ll start saving for our next car when my husband graduates/gets a pay bump.

        • Yeah, I definitely think a visual would be helpful because my explanation confused myself even :P

          I was quite surprised that my insurance company doesn’t charge me an extra fee to my insurance premiums monthly! That has been incredibly convenient.

  5. I’d be curious to see your spreadsheet as I have a similar approach and would probably find something to optimize in my own after reviewing your methodology. I enjoy tinkering with my spreadsheets more than I should probably admit, but this is a safe space, right? ;)

    Travel is one of four categories that float/roll-over, and major trips are earmarked within my annual projected NW/Savings tab (this includes forecasts for spending and savings by month, as well as target goals for the next few years). The biggest reason I exclude my “save to spend” cash is that I find it harder to go through with the purchase when I know that my NW will take a negative hit…even if the hit is small and temporary. I’m sure someday this won’t be a big deal to me (FI?), but not yet. Like so many things in life, it all comes down to psychology.

    • I’m going to show some screenshots of my April spending plan next week. If you’re still curious after that, I can move it to a Google Doc and share it with you :) And yes, this is totally a safe space! If anyone makes fun of you or I for tinkering with our spreadsheets, I am in my right to vote them off the island ;)

      What other categories do you let float/roll-over? I definitely understand why you exclude your “save to spend” cash from your net worth. I used to hate spending money since then the overall number would go down/not go up as much as “normal”. Now that I really don’t have normal months anymore between the stock market, bonuses, etc. and my savings rate is so much higher than my spending rate, I (surprisingly) don’t worry as much about the Net Worth Number. I wonder if there is anything you could do to help your money psychology and keep your “save to spend” cash in your net worth?

      • The other three categories are Charitable Giving, Clothing, and Wine Collection…all about ensuring the important buckets get filled! :)

        Theoretically, all savings are eventually “save to spend”, but I like to know what is earmarked for the next 6-12 months vs. 1yr+. I suppose I could include ST spending in my NW, but not sure what benefit there might be to including it in my overall calculation–curious to hear any thoughts!

        • I have those ones roll over too! Though I don’t collect wine, so I don’t have a budget category for that :)

          In my net worth, I have three general categories:
          1) Cash – this is all of my checking and short-term savings accounts (e.g. vacations/anything I plan to spend in the next 6-12 months) less the currently floating credit card balance
          2) Savings – this contains my emergency reserves, my savings for replacing my vehicle, and a down payment on a condo (that might be in the next 6-12 months, but I think it should stay in savings until a deal closes)
          3) Investments – this sums up my taxable investment account balance, my Roth IRA, and my Traditional and Roth 401(k). I count taxable investment accounts towards retirement saving as well in my numbers.

          So in my picture, you’re essentially not counting “Cash” in your net worth. For me this category fluctuates pretty randomly. I used to get annoyed by that, but as my net worth grew (I would say I hit this point in the last year or so), I stopped caring about the fluctuations of my checking account or my investments, but tracking my contributions to the Savings and Investments buckets. After all, all of the money in checking/vacation savings is meant to be spent in a short time-frame. Based on that, however, I definitely see the rationale for not counting Cash in my net worth.

  6. I don’t have a specific travel fund either. Unfortunately, we don’t have any trips planned any time soon, but when we do take vacations the money comes out of general cash flow or savings.

    I’m a big believer in spending money on experiences rather than things so I fully applaud all the trips you have planned!

    • Thanks! I’m quite proud of myself for _actually_ spending all of this money on trips! My 3 trips so far this year have been a lot of fun and I’m looking forward to the later trips :)

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