How Should Travel & Vacations Fit Into a Budget?

[Retired To Win]

I'll start by saying that, in my case, they don't fit at all.

To me, travel and vacations are optional activities, so I don't actually include them as part of my basic living expenses.  I don't budget for them.  I just take my trips and vacations opportunistically.  That is to say, whenever a good opportunity presents itself I check to see how much surplus money I have over and above what I need to cover my basic living expenses and keep a one-year Emergency Reserve funded.  And if I think I'm flush enough, I'll spend the money and take the trip (which I can just pick up and do because both my wife and I are earlier retired).  Rinse and repeat.

But that's just me.

What do you do?  How does what I do strike you?

[Riff]

We have a travel fund account that gets a direct deposit from the wife's paycheck.  Travel is our thing though.

When we were dating I asked her, "What do you want to do in life?"  Her first answer was, "Travel!"  So for us, this is a priority (within reason), and worth putting off FIRE for a bit.  But not too long!

[cashstasherat23]

I don't specifically keep a budget line item for travel. By way of my mother, I have staff travel benefits, so often the opportunity to travel comes up suddenly via a standby flight. When that happens, I either borrow money from my e-fund or put expenses on a credit card while traveling.

I travel very frugally and aim to pay off all expenses/replenish my e-fund by my next paycheck. To me, travel is something that I value over almost anything else, so have a hard time turning down opportunities when they come along. I would rather spend less on groceries or pay a bit less extra towards my student loans the next month than miss an amazing travel experience. Is that super mustachian? Probably not, but it's worth it to me.

[TN_Steve]

Much like OP, we don't really have a travel line within our budget; rather, it essentially transcends the budget.  We save money for two reasons:  1) travel and 2) Early Retirement so that we can travel much more.....

Others (Most others?) will have different priorities, so YMMV.

[mak1277]

I plan on budgeting $500-$1,000 a month for travel in my retirement budget for use in determining my FIRE date.  This is more for the purposes of "hitting my number" though, rather than actually having a hard and fast "budget" for travel. 

[MoneyRx]

Traveling has never been something I have budgeted for. If it is something I want to do, I just pay it and go and this has worked out pretty well for me. Although, this has been primarily just myself traveling or myself +1. Once kids are in the picture, that might be a cost that needs to be planned for and budgeted.

[Pigeon]

Travel is way down my list of priorities.  If I am going to travel, I'm not going to be horribly mustachian about it.   No camping, no hostels, etc. Airbnb kind of creeps me out.

Sometimes our travels are dictated by family events.  But we don't take a vacation every year.  Mostly we've been renting a house in the Adirondacks on a lake from people we know once every couple of years, and we don't have a separate account for it.

[thedayisbrave]

I hadn't really put travel in my budget before, but after taking some trips to Europe and trips in the US at the drop of a hat, I decided I needed to be less trigger happy.  I've found that I'll easily take a random trip if tempted (I definitely value experiences over things) but after a close friend questioned my spending, it made me realize I have horrible FOMO and will unthinkingly drop money on plane tickets and transportation if there's something going on that I just can't miss.

So I've started working it into my budget.  Some months I spend nothing, some I overspend, but my annual target is $1500 for this year so I've worked it into the budget at $125/month. 

Just started doing this so we'll see but so far I like seeing how much would go each month toward travel if I stick to that budget.

[aschmidt2930]

I don't budget for it, if I want to go somewhere, it will just reduce my savings rate.  Clear cut way of seeing the trade offs in my viewpoint. 

[Retire-Canada]

I budget for travel as part of my planned annual COL. Having said that if money is tight or like right now exchange rates are brutal [CDN < USD] I adjust my plans for more local adventures.

I wouldn't FIRE without the ability to travel a lot, but my idea of traveling is camping, riding mountain bikes, surfing, riding motorcycles, etc... All fairly low cost.

-- Vik

[kpd905]

I average around $500/month from credit card churning, so my travel expenses out of pocket are pretty minimal.  But I think I would cut almost everything else before giving up vacations.

[Cookie78]

I don't really budget for it, but I sure track it because it's currently one of my biggest expenses, even though I far prefer to travel the inexpensive way. It's going to drop a lot after May since I'm not going to plan any more major trips. The trip in May was planned before I discovered MMM.

[catccc]

I budget for everything, but when a vacation is coming up, I just make sure to throw anything extra at it if needed.  This sometimes means a bonus at work will go straight to the vacation account instead of invested or otherwise saved.  Not the most mustachian, but like many others here, good travel is something I do not want to give up for FIRE.  I just try to be as reasonable as possible about it.  And try to only be unreasonable infrequently.

[Ricky]

I don't budget in the sense that I plan on spending anything.

I have a theoretical cap, with no actual plans to spend that much. I think this is the best way to "budget" for anything. For me, I'll say, I can spend up to $1k a month, should I choose to go anywhere. But most of the time I won't go anywhere and save the money anyway. It's not a budget in the sense that I carry leftover balance over next month. I just hard cap it at $1k since I've decided that's what I could afford in case I wanted to. Otherwise, the unspent money just ends up invested.

[Retired To Win]

So far in this thread, 10 of the 14 responders to my OP in some way have indicated that travel is very important to them.  And yet only a minority (4) actually "hardwire" travel into their budgets.  Leaves me thinking that, for most, travel is very important but still optional.  I see that flexibility as a good thing.

[Emilyngh]

Right now, travel is not important to me at all, and we follow the opportunistic route.   We don't budget to travel, but when we do it it's inexpensive enough to pay for from side income, etc.

I have traveled a great deal in my life, and it got to the point that I was sick of it.   Travel has slowed down a lot in the last few years, since I started a job that doesn't require as much and we have a young child.   Since having a break, I'm less sick of it, but still not itching to travel.

Currently, we take one or two trips a year driving 5-9 hrs to visit family.   Other than that, we've take a few trips with my parents, including a cruise to Bermuda last summer and will be going to a beach with them this summer.   But, for those trips they helped to pay for costs (eg., renting the condos we're staying in this summer), so they've been inexpensive.

I'm thinking that maybe next year, DD will be old enough and I'll be enough over being sick of travel that I may try to take a work trip to somewhere interesting and bring DH and DD along (so we'll only have to pay for their flights, their food, and some entertainment).

As of now, I'm not figuring large travel costs into FI.  Maybe my perspective will change again over time, but as of now I'm thinking that I might want to take one bigger trip to somewhere really interesting every 2-5 years if I'm really interested in going, and otherwise just do the type of occasional small opportunistic traveling we've been doing.   

[MMMWannaBe]

I am throwing in my $0.02 which may not be the best example to follow (mustachian it is not)

Currently, I am in a transitional stage from working to SAHM.  Travel is our #1 priority in life (and our kids of course).  The only reason I don't budget for travel, is because we don't have the revenue stream to cover it (that is another discussion that should resolve itself next year).  But that doesn't stop us from traveling.  We spent $7,500 last year on travel and this year will be no better.  You are probably wondering where we get the money....Savings or I sell investments (hate to terminate those employees, but I can't say no to travel).  When I am old and thinking about my life I am pretty sure it is the experiences I will remember and I am trying to make as many of them as possible.  It is un-mustachian and I am okay with that.  For our retired life we are budgeting such that we can spend winters overseas in different locales. 

[deborah]

I am retired. On my list of things I was going to do when I retired was to visit my parents 7.5 hours drive away at least once a month, while they were still alive. I see them at least that often, and until another travel thread I didn't count this as travel, but I guess it is. This is not a budget item. When my father became sick, I started seeing them every two weeks, and varying the route. It is amazing how many different ways you can go between two points 7.5 hours drive apart, when you accept that you can take a few extra hours, and stop overnight somewhere.

But because this has gradually evolved, it is not in my budget. I am certainly spending more on petrol than I did when I was working, but the travel doesn't add much to my budget (if anything).

However, there are a few overseas trips that I intend to take, and they will need budget!

[11ducks]

I budget $100 a month into an account for vacations, that covers a weekend away or a few days visiting family a year.

I also put about the same into my slush account for school holidays each year (always more expensive with kids!) I budget for $200 per term break (3 x a year), and $500 for Xmas hols- this pays for some travel/events/extras (eg we got yearly zoo passes last holidays, and will use them all year).

[SnackDog]

I have a master vacation spreadsheet used for planning trips. It has everything from itineraries, to costs, confirmation codes, images of receipts, etc. I only include major trip expenses, like air, hotel and car. I don't budget road trips of less than 4-5 days.  It has a summary page of expenditures for each year.  We try to keep annual costs to 3-5% of gross salary.  We do feel pressure as we live abroad now and want to see some of the continent while we are here.

[MetalCap]

DW getts paid bi weekly while I'm semi monthly.  We use her two 3 paycheck months a year to fund travel.  It allows for smooth bare bones budgeting without being distracted by funding travel.

We've found it prevents the travel dream from siphoning off the FIRE dream and keeps costs in check.  If we budgeted monthly, we'd start 100/month but then up it 150, 200 and soon we'd have nothing for FIRE, instead of vice versa.

[MayDay]

We have little kids, so ewes are either paying for 4 people, or scrabbling to arrange childcare.  So that effects the cost of travel for us.

We also have family all far away, so a lot of our travel is to visit them. 

So after being gone visiting family for 2 weeks a year (3 last year) we feel pinched for time more than anything.  H has 3 weeks vacation a year, and I don't work but hate not just take off without him, spending money and having fun while he is working away.

That said, this summer we are looking to plan a trip that isn't bank rolled by family (last year we had two trips paid for by family).  We won't save as much this year if we spend 3k on a trip, but we haven't done a $$$ trip in the last 10 years, so we figured we can loosen the purse strings. 

We likely won't do another expensive trip for at least 2 years if not more, and the family trips mostly just cost a bit of extra gas.  I imagine at some point once the kids are out of the house we will travel more, but travel isn't a huge priority for us, either, or at least not expensive international travel. 

[2Birds1Stone]

I estimate I can "live" off of $18k/yr in FIRE. I will budget another $12k/yr for travel. Whether that is a few vacations a year or semi permanent slow travel across Latin America or SE Asia.

The whole lure of FIRE for myself and SO is the ability to enjoy things we likely won't once we are full blown retirement age. We love travel and adventure. I think we will either have a VERY low COL home base in the USA or no permanent address and do some slow long term travel while we are young enough to enjoy it.

[Neustache]

We budget for 3K a year in travel.  This will usually be one big trip, but can be broken down into smaller trips.  We don't fly, so these are all road trips. 

We have two small kids, ages 6 and 3.  I suspect we'll travel more in retirement. 

[Philociraptor]

We have 3 forms of travel:

• Visiting friends and family
• Walking, eating, and drinking in a US city we like
• All-inclusive resorts in Mexico or the Caribbean

Those are in order of typical expense. To pay for these travels we budget $300 per month that gets automatically moved to a saving account at a different bank. When we complete a trip we gather up all receipts and move that money from the savings account to our checking, since we put everything on CC while we're away.

[aneel]

We do actually budget for it, but its a new concept.  Last year we did some travel and were diligent about tracking expenses.  At the end of the year we said we enjoyed what we did, and would be happy to stay at that level of "vacationing" or less for the intermediate future, so this year I set a budget of 2014 travel, and we'll keep that in mind as we plan our little trips.  I don't expect our travel to be constant from year to year.  Last year, we just did selfish travel (took a road trip and rented a house, traveled to my college reunion), and this year we are in for more family oriented travel, as in visiting family on the other side of the country, so I expect that to cost a bit less since our flights are free.  It's still a learning process for us, but at least we know the upper bound we're comfortable with.

[Zamboni]

I don't budget for it in the sense that I don't budget for anything.  I just enter the expenses in my spreadsheet after they happen.  I know exactly how much I spend each year in each category.  If it's more than can pay in addition to the regular bills when I get paid that month, then the money comes from my savings account which ebbs and flows for the purpose of just this type of non-regular expense. The same account is used for periodic expenses like fixing the water heater, car repairs, sports league fees, etc.

Last year I only spent about $500 on leisure travel because I didn't fly anywhere (other than business trips) and I camped on the few fun trips we went on.  The year before I spent about $3500 on airfare and hotels for the family.  This year I have tons of airline miles and a companion pass, so I expect it will not be a big travel expense year even though I will travel quite a bit. 

Most months I don't travel for leisure or need to fix my car, so the savings in that account build (about $500-$800 per month in a no expense month.)  That account is separate from my retirement savings and college funds; the latter are automated to increase regularly before I see any of my paycheck in the two accounts I actually use for spending/short term savings.

[tomsang]

Currently our budget is a $1,000 per month. We have been exceeding that over the past few years. We have a better shot at achieving it once we are retired as the kids will not be with us on all of the trips. I am debating increasing it to $1,500 a month for now and in retirement.

We are still figuring out our ideal spend.

[rubybeth]

I kind of budget for it, in the sense that I track all of our expenses and can figure out pretty easily if we can afford to travel where we'd like. Last year, we went to Europe in high season (July) and I wondered aloud to DH how much it would be to go back in the spring. Airfare was significantly less in May, so we decided to go back ASAP (and the Euro being low now will also help). I figured the trip expenses into our budget accordingly. But I also know we won't take any trips in 2016.

During retirement, I plan for us to take at least one trip per year, possibly two if we can go on the cheap by staying with family or friends. This is one reason our retirement 'budget' is pretty high. Travel is important to both of us, and right now, it's the time factor that constrains us more than money.

[Stachetastic]

With young children and our family all within 30 minutes of us, we have not had the travel bug much in recent years. This past December, we drove to FL to stay with my aunt and hang out on the beach. It was the perfect relaxed getaway that we wanted, with a two year old. I would like to start budgeting for more travel, but with DH still laid off and my student loans still looming, travel is just not a priority. We did purchase a (very) used pop up camper last year for $900, and that is our travel for now. The kids love it, we can stay as close by as we need (camp grounds are within 30 minutes of our home, or we can wander much farther), and the dog can even come with us.

[Gimesalot]

We budget $500 a month for travel.  Most of it just sits until we have to visit family in Argentina, at that point we burn through most of it. 

Despite the fact we save a lot for traveling, we don't travel in luxury.  We choose low cost destinations, stay at low cost accommodations, use public transportation, and we mostly eat where locals would eat.  Also, we spend some time researching free days or other discounts for visiting museums and other attractions.  This works for us because we are more interested in experiencing the culture of a place as opposed to the attractions.

[Cookie78]

This works for us because we are more interested in experiencing the culture of a place as opposed to the attractions.

Yes, yes, yes!

[epipenguin]

I do have a dedicated "vacation" savings account into which I put $150 a month. I decided to do this when I went down to part-time/contractor status, because now I don't get paid vacation days and I felt that if I didn't have money specifically set aside for the purpose to cover both spending and losing income for those days, I might never actually take a vacation. When I was working full time and earning lots more money, I just took vacations whenever and paid for it out of money leftover from regular spending. Now my budget is much tighter.

Having said that, I don't ONLY use that vacation savings account for vacations. So far it's worked out that me and the SO will take a "big" vacation involving flying somewhere every 2 or 3 years, and the rest of the time we do shorter road trips. We pay for the road trips out of pocket. This year is going to be a big trip, and while I put a deposit down out of pocket, the rest of my portion will come out of the savings account.

[Villanelle]

We don't actually budget, so it doesn't fit anywhere for us.

But due to our circumstances (living in Europe for a limited time), we made a decision that we would allow ourselves far more travel opportunities, and thus far more travel money, than we otherwise would.  We still try to save where we can, especially with accommodations and traveling off season, but if there is an opportunity for travel, we do it, without question.  Because we have no debt and automatic investments, we feel comfortable doing this, though of course if we weren't spending this money it would be used to increase our 'stache.  But we are happy to work an extra year in order to have given ourselves these experiences that we would otherwise never get, or which would cost us significantly more because we'd be traveling from the States. 

[cashstasherat23]

So far in this thread, 10 of the 14 responders to my OP in some way have indicated that travel is very important to them.  And yet only a minority (4) actually "hardwire" travel into their budgets.  Leaves me thinking that, for most, travel is very important but still optional.  I see that flexibility as a good thing.

This is precisely it. If I have the money to spend and feel that the trip is worth postponing my savings rate, or in my case paying a bit less on my student loans that month, then I do it. I don't put money aside for travel, but will take a bit from my surplus cash that month instead of throwing it at loans. No trip that I take is ever over $500 or so dollars so I can always pay it off and get right back on track the next month. I do quite a bit of CC churning and earn lots of points for business travel as well, so I am able to have this strategy work for me and get to do some amazing trips with not a whole lot of expense. However, if I really needed to buckle down, I would eliminate the travel, but as others have said, it would probably be the last thing to go from my spending.

[SantaFeSteve]

DW getts paid bi weekly while I'm semi monthly.  We use her two 3 paycheck months a year to fund travel.  It allows for smooth bare bones budgeting without being distracted by funding travel.

I like this approach!  I get paid bi-weekly and the DW is monthly so I get the 2 "bonus" checks each year that have been going to pay off Student loans, but we are really hammering those with our regular budget.  I think we may adopt this approach for at least a portion of our travel expenses.

Currently we have a rough travel plan - 2 vacations per year and 1 family visit (not the same as a vacation even though we love our famlies).  We plan where, take a SWAG at the cost, and then add the monthly portion of that to our budget.  We have been able to do some credit card churning to pay for flights, which is huge, but it is not an insignificant number each year.

[ZiziPB]

I currently budget $500 per month for travel and will continue to do so when I FIRE.  A lot of my travel involves going to Europe (both because of family circumstances and interest in visiting Europe) and that requires expensive flights.  However, since I will be based in Europe and am hoping to be able to do a lot more "slow travel" when I FIRE, I hope that budget will go a lot further than it is going now...

[Retired To Win]

So far in this thread, 10 of the 14 responders to my OP in some way have indicated that travel is very important to them.  And yet only a minority (4) actually "hardwire" travel into their budgets.  Leaves me thinking that, for most, travel is very important but still optional.  I see that flexibility as a good thing.

This is precisely it. If I have the money to spend and feel that the trip is worth postponing my savings rate, or in my case paying a bit less on my student loans that month, then I do it. I don't put money aside for travel, but will take a bit from my surplus cash that month instead of throwing it at loans. No trip that I take is ever over $500 or so dollars so I can always pay it off and get right back on track the next month. I do quite a bit of CC churning and earn lots of points for business travel as well, so I am able to have this strategy work for me and get to do some amazing trips with not a whole lot of expense. However, if I really needed to buckle down, I would eliminate the travel, but as others have said, it would probably be the last thing to go from my spending.

Okay.  If I adjust what you do to my situation (FIREd, no debt to pay, no need to build up savings any further), we are very close in approach.  Main difference is that you think of the travel cost as coming out of your surplus monthly cash flow above your core costs and minimum debt payments, while I think of it as coming from a cumulative pot of surplus money (into which my monthly surplus cash flow goes).

[Bob W]

Travel and entertainment are actually big items for us.  Probably our 3rd biggest expense.   Maybe 6-9K per year.     We don't budget at all but will start playing the credit card game this year with a focus on reducing that amount significantly.   

[aspiringnomad]

My SO and I both have a severe case of wanderlust that shows no real sign of abating. We've both been to ~35 countries and a big part of the FIRE allure is to be able to slow travel cheaply whenever we want. So we don't really budget for travel despite it being our biggest expense after housing and food. We do agressively accumulate and use frequent flier miles, so that helps quite a bit. I've tried to scale back the number of international trips we take to one a year until we FIRE, but she'll have none of it. She's much happier with at least two per year and if I'm honest with myself, so am I.

[Retired To Win]

My SO and I both have a severe case of wanderlust that shows no real sign of abating... we don't really budget for travel despite it being our biggest expense after housing and food... I've tried to scale back the number of international trips we take to one a year until we FIRE, but she'll have none of it. She's much happier with at least two per year and if I'm honest with myself, so am I.

Have you worked the math to calculate how much you are delaying getting to FIRE as a result of your wanderlust?  I'm all (really) for people making choices that work for them.  But I always try to analyze what the costs of my decisions are and then weighing that against the benefits.  THAT's how I know if a choice is really, really working for me.

Good luck.

[use2betrix]

I get paid weekly. I "budget" and plan for 4 paychecks a month. Typically 3x a year we get 5 paychecks in a month. I usually use that for bigger items or vacations. I'm going to Mexico soon, and my gf and I paid for virtually the whole thing with our tax returns.

[aspiringnomad]

My SO and I both have a severe case of wanderlust that shows no real sign of abating... we don't really budget for travel despite it being our biggest expense after housing and food... I've tried to scale back the number of international trips we take to one a year until we FIRE, but she'll have none of it. She's much happier with at least two per year and if I'm honest with myself, so am I.

Have you worked the math to calculate how much you are delaying getting to FIRE as a result of your wanderlust?  I'm all (really) for people making choices that work for them.  But I always try to analyze what the costs of my decisions are and then weighing that against the benefits.  THAT's how I know if a choice is really, really working for me.

Good luck.

We could probably shave a couple years of working off if we cut out travel entirely. If I were still in my 20's or hated my job, that trade-off would probably work for us. But there is a seemingly never ending list of places we want to visit and we don't mind working a couple extra years so that we can see some of them now instead of waiting until we're close to 40. Plus, exploring new places (on a shoestring) really does renew us and keep us feeling young, so we justify it as an investment in our long-term health :)

[SilveradoBojangles]

We budget $500 a month for it. Like many others here, it's kind of our thing. Even with that in our budget we spend less than 22000 on our non-housing/utilities expenses, so it is worth it to us. Obviously, we are mustachian about the way we travel. We currently have three trips planned. We are headed to Palm Springs for a tennis tournament next week (we'll drive there and split an airbnb house with friends, and cook for ourselves), we are headed to Europe for a month in June/July (many of these expenses are paid for by airline miles and work, though we have been watching the Euro's plummet with interest), and are headed to a wedding in Colorado in august (fly with miles, camp). My guess is we'll have enough leftover for something fun next fall/christmas.

[justjenn]

Travel is a priority for me, so I have a separate account where I keep $2k specifically for travel. When I go on trips I take out of this account and then re fill it. When it's
"full" I don't contribute any more to it. I used to contribute a set amount monthly, but I felt like when I didn't go on trips for awhile the account would get too bloated and the money would be better placed elsewhere.

[Kris]

Travel is important to both of us, so we have a dedicated savings account into which we put a set amount of money every month.  That way, when we plan a trip, it doesn't derail our normal monthly spending/socking away money for retirement amounts. 

[Exhale]

We have 3 forms of travel:

• Visiting friends and family
• Walking, eating, and drinking in a US city we like
• All-inclusive resorts in Mexico or the Caribbean

Those are in order of typical expense. To pay for these travels we budget $300 per month that gets automatically moved to a saving account at a different bank. When we complete a trip we gather up all receipts and move that money from the savings account to our checking, since we put everything on CC while we're away.

Why at a different bank?

[WhatIsFrugalAfterAll]

Travel is not important to me so don't budget anything for it.

Rather spend it on grownup toys.