Trying new restaurants, visiting world-famous attractions and enjoying a nice hotel room are some of the best parts of a vacation. They’re also things that tend to cost money.
And if you don’t pay attention, you can easily fall into the trap of spending too much during your travels. It’s the one mistake many travellers often make when going on a trip.
“‘Vacation mindset’ can be to blame for overspending on vacation,” Julie Everett, a senior financial coach at Financial Finesse, told HuffPost. “The excitement of doing something other than your usual day-to-day can cause you to lose sight of the long-term consequences of spending more than you can afford.”
Countless people prioritise travel as part of their lifestyle, and there’s nothing wrong with spending your hard-earned dollars on travel ― within reason.
“Vacations are meant to be enjoyed, but spending recklessly while away can have lasting consequences on your financial standing,” said Courtney Alev, a consumer financial advocate at Credit Karma. “Do the work before you plan and head out so you know your spending limits.”
To help travellers do just that, we asked Everett, Alev and other personal finance experts to share their advice for avoiding overspending on vacation.
Resist peer pressure.
“Social influences, especially when traveling with friends or family, can contribute to overspending as individuals may feel pressured to participate in costly activities or dining experiences,” said Kara Stevens, the author of “Heal Your Relationship With Money” and founder of The Frugal Feminista.
Indeed, a 2023 survey from Credit Karma found that more than a third of millennials and Gen Zers have a friend who encourages them to overspend.
“Even if you feel secure in your financial limits, it can be especially difficult to say ‘no’ to a friend’s expensive request while on a trip together,” Alev said. “Have conversations about money with your travel partners both before and during your trip. Knowing what each of you is comfortable spending can prevent awkwardness or resentment, and make your vacation more fun!”
Social media and childhood experiences can also put pressure on travellers to spend more than they should on travel.
“You see other people on your feed having lavish vacation experiences and want to ‘keep up,‘” said Stephanie Zepeda, a therapist specialising in financial therapy for couples, families and individuals. “Or you never got to go on vacations as a child and are in some ways ‘making up’ for those missed memories. I cannot tell you how many times I’ve heard parents say ‘We wanted to give them the experiences we never had.’”
Discuss priorities ahead of time.
“The first step is not just choosing an amount you want to spend ― it is having the ‘expected experiences’ conversation,” Zepeda said.
Before embarking on the journey, talk to your travel companions (or if you’re traveling alone, take some time to be honest with yourself) about what you want to experience during your travels. So if you want to do something pricey like skydiving, then you can discuss doing one less dinner out to cover the cost of the activity.
“A budget should not be about saying ‘no,‘” Zepeda said. “It should be about saying ‘yes’ to the most important things. But the only way to determine what is the most important thing is to open up and have a conversation beforehand. Otherwise, we can tend to just say yes to everything, even things that might not have even been that important to anyone on the trip.”
Set a budget — and stick to it.
“Consumers often overspend on vacations because they don’t plan properly, underestimating just how much they will spend beyond just airfare and hotel,” said Andrea Woroch, a consumer finance and budgeting expert. “Daily meals out, snacks and drinks on the go, transportation to and from activities and little souvenirs here and there add up fast and can send you way over budget.”
She recommended thinking about each and every expense and finding options to help you cut back without sacrificing the joy of vacation.
“This could mean finding a hotel that offers free breakfast or one that comes with a mini kitchenette so you can prep some of your own meals,” Woroch said. “Or carrying a reusable water bottle is another simple thing to cut back on costs of water bottles, which can be really high at popular tourist attractions, and figuring out free transportation can greatly reduce the cost of sightseeing.”
Then you can move onto the fun stuff. Figure out where you want to splurge a little as you skimp in other areas.
“Yes, the idea of a vacation budget can sound limiting,” said Bola Sokunbi, the founder of Clever Girl Finance. “Still, it’s a way to enjoy your vacation without the guilt or worry about spending too much money. Decide what activities you want to do, such as excursions, spa treatments, or eating at five-star restaurants, and allocate more money to the things you want to indulge in. After all, you’re on vacation, so you might as well enjoy it as much as possible.”
Create an itinerary.
Again, advance planning is the key to avoiding the trap of overspending on vacation. Make an itinerary that will help you stick to your predetermined budget and achieve your vacation activity goals.
“Having an itinerary, even if it’s a loose one, can help you be intentional about how much you’re spending while also ensuring that you are spending your time the way you had hoped,” Everett said. “It is possible you could find some fun, low cost, attractions like museums or city parks if you’re on a tight budget or maybe you fit some of those activities into your vacation so that you have more money to spend on other things that have a higher price tag.”
Of course, free time and spontaneity are important parts of travel as well, but sticking to at least a basic itinerary will help you keep spontaneous spending in check.
Look out for hidden fees.
“Sometimes overspending is an honest accident caused by missing fees in the small print,” Everett said. “Some examples might be cleaning fees for your Airbnb, the cost to check your luggage at the airport, or port fees on a cruise.”
She recommended taking the time to investigate possible fees or additional expenses related to your vacation ahead of time so that you aren’t caught by surprise after it’s too late.
Don’t forget about local currency exchanges.
“A sneaky way people fall into overspending is not being aware of the currency exchange rate or fees when on an international vacation,” Sokunbi said. “Exchange rates change daily, and depending on the difference, you may spend more than you intended.”
She noted that exchanging money at a local bank or ATM is usually more cost-effective than doing it at the airport. Check with your bank or credit card company before your trip to find out about extra fees they might charge.
“Also, for United States travellers, when making purchases with your debit or card card, it’s important to always charge in the currency of the country you’re in rather than in U.S. dollars,” Sokunbi added. “The reason is that your bank will give you the best exchange rate compared to the merchant you’re buying from.”
Put aside that YOLO mentality.
“A big reason people overspend on vacations is the YOLO mentality that can creep up when you’re away with your family and having fun,” Woroch said. “People who spend months or maybe a year planning a trip want to get everything out of it even if it means going into debt. The temporary benefit of enjoying something beyond your budget on a trip overshadows the dangers of overspending and going into debt.”
Remember your everyday life and finances await you at the end of the vacation, and try to strike a healthy balance between indulging and saving.
“The excitement and relaxation associated with vacations can lead to a ‘treat yourself’ mentality, encouraging overspending on experiences, activities, and souvenirs,” Stevens noted.
Create a vacation savings fund.
“Once you know how much you will spend, create a savings plan for your vacation,” Sokunbi recommended. “Opening a dedicated account is a great idea to save money for your trip.”
As you reflect on previous vacations where you overspent and look ahead to your next trip, set aside money to help you splurge a little without the stress and guilt.
“Start a separate savings fund and figure out how much you need to put away each month to be able to enjoy these elements on your future trip,” Woroch advised. “Using a separate savings account and one that offers higher interest could mean saving more without having to put away as much. For example, high yield online savings accounts pay you much more in interest than compared to those traditional savings accounts offered by brick and mortar banks.”
Use cash.
Another way to avoid going overboard with spending on your vacation is to use cash whenever possible. Take out a set amount each day to cover your planned expenses.
“Reliance on credit cards, often due to the convenience they offer during travel, can lead to overspending without an immediate awareness of the financial impact,” Stevens said.
Make a separate spending account.
If using cash isn’t a good option for you, find other ways to put limits on your vacation spending.
“Creating planned spending accounts can give you a definitive stopping point,” Everett said. “This is an account with a specific goal, in this case vacation, and can be incredibly useful when accumulating money for a particular goal but also in keeping you accountable when it’s time to spend that money. Once you’ve spent all the money from that account, you’re at your limit!”
You might use that account for all your vacation-related expenses or just the discretionary things like bars, souvenirs and entertainment (as opposed to accommodations and transportation).
“An additional step to help maintain accountability is to put that dollar amount for the vacation spending on a debit card, where there is a limit,” Zepeda said. “Be sure the debit card does not have overdraft protection, because that can be another way people spend unintentionally. Using a debit card does not mean that you cannot transfer more money onto it, but it gives you an easy way to track how much money you have left for the trip and then you can decide intentionally if you want to transfer more.”
Make use of travel rewards cards.
You can also cut down on your vacation spending by using a credit card with good travel rewards. That way, you can earn more points on your spending and use them to pay for hotels, flights and other expenses.
“Look for a robust travel rewards card that gives you more miles or travel points for the types of purchases you make the most so that you can redeem those for savings on future trips to avoid going into debt on another vacation,” Woroch said.
Remove the temptation.
“I genuinely feel like people don’t overspend on vacations intentionally,” Zepeda said. “If you find yourself constantly in a peer pressure scenario, perhaps consider strictly vacationing places where the fun is not centred around spending.”
For example, she suggested opting for all-inclusive resorts or getting in touch with nature on a camping trip. There are infinite ways to travel and all offer something magical to discover.