When you're excited about the idea of taking a family vacation, talking money and budgets can be a real buzz kill !
Affordability is the number one decision factor for most parents when it comes to making their family vacations. Every one wants to get the most value for their hard earned dollars.
So how do you figure out vacation costs and what you can afford?
The definition of "an affordable vacation" varies greatly between people. The "right" answer is tied closely to how much you earn and how much you owe. Some parents consider a family vacation to be a mindless means of escape and relaxation. Other parents view family travel as a priority. To them it's an important means of education and family bonding experience. These opinions will determine how much parents are willing to invest in their family vacations. Also let's be honest, some vacations will be more important than other years - like you only turn 40 once (supposedly) or you haven't enjoyed a holiday with your folks in 5 years . With all these factors in mind, a vacation budget will probably range somewhere between 5-15% of your annual income.
Creating a vacation budget will save you from the "spend now & freak out later" syndrome. You'll be able to relax and actually enjoy your vacation instead of having to act like scrooge with the kids. It will help you avoid credit card interest , a cost many families don't address until it's too late. Having a vacation budget will help you focus, prioritize and make wise choices.
There are a LOT of variables and moving parts to any family vacation budget but here are the 5 main categories of expenses...
Transportation - Trains, planes and automobiles! Getting to your vacation destination will often will take the biggest bite out of your vacation budget. Wise spending here is important. Flights & fees, rental car, cruise fares, gasoline & parking, tolls. As you can see all of these costs vary depending on your travel dates, destination and many other factors.
How do you know if it's cheaper to drive or fly to a destination? Generally if you're traveling more than 500 miles it works out to be cheaper to fly. Of course you have to consider the number of airfares needed. If a family needs to purchase 5 or 6 airline tickets then driving may be a smarter decision. If it's just parents and a baby then flying is the way to go.
Make sure you are comparing "apples to apples" here by including ALL of your costs. Most airlines will charge for luggage. If you are flying you'll still need a way to get to the airport. This means you'll have to budget for public transportation, a driver, gas, tolls or parking depending on your situation.
Of course, once you arrive at your vacation spot, you'll still need to get around. Airport hotel shuttles, rental cars, taxis, buses, parking - these are all out of pocket costs that you'll need to calculate into your budget plan.
Accommodations - Tent, camper, motel, Grandma's house, short stay apartment, resort ocean view penthouse with private butler - each of these choices comes with a different price tag. This is where the budget balancing act begins. Often the price you pay for your accommodations is determined by location. You may find a much cheaper hotel in the suburbs but this will significantly raise your transportation costs and precious time when it comes to sightseeing in the city. The "average" cost of a hotel room in the U.S. is around $150 per night. This price tag will be significantly influenced by location, hotel features, convenience and the view outside your window.
Hotels and cruise ships all have occupancy rules regarding how many guests can share a room. Depending on the number travelers in your family and their ages, this can have a significant affect on your lodging costs.
Food - Budget $35-$50 per adult/per day and $15-$25 per child/per day as an average. Remember food costs are significantly higher in most tourist destinations either due to supply and demand or the hard costs of shipping food products into an island nation. Bear in mind the culinary experience in every destination speak a great deal about the history and culture of that area.
Think that's way too much? Don't take our word, see what Disney charges for their food plans.
Note - this does not include booze. Add another $50 for every person who plans to drink. Starbucks stops, a couple of beers and some bottled water add up fast. Don't believe us? - See what Carnival Cruise line beverage package costs.
Like everything else, food budgets are influenced by many different factors. Are you grabbing a shrimp taco from a seaside food truck, dining with a Michelin star chef or heating mac & cheese for the kids in hotel lobby microwave. If you plan to be spending most of your time in restaurants, be sure to tag 15-20% onto these numbers to tip your waiters.
Entertainment - Most people aren't going to spend money on flights and accommodations and then simply sit in their hotel room (unless maybe if our opted for that penthouse view and butler). Sightseeing, shows, admission fees, Spa charges and tour guide fees. Your destination and style of vacation will greatly influence the amount you spend here. For example- major theme park admissions like Disney and Universal average around $100 per person/per day because they are entertaining you all day on their attractions. Buying a city sightseeing pass in Europe might cost $70 per person and give you access to hundreds of museums and historical sights. You'll probably want to include some spending here for the kids. Instead of constantly reaching into your pocket for every crap souvenir, this is a wonderful teaching opportunity to give your kids a souvenir spending budget.
Travel Insurance - This usually costs less than 10% of the total cost of your vacation. If made annonrefundable travel purchases or have reservations in place that include cancellation penalties, then you need to think about travel insurance. If you are traveling overseas it's important to recognize most health insurance will not cover you outside of the United States. A vacation medical emergency could devastate your family finances. The need to change or cancel your travel plans could result in the total loss of your vacation investment. If you can afford these types of losses then you do not need to take travel insurance. Personally, I believe it is a cheap price to pay (speaking as someone who's mom suffered a heart attack and needed open heart surgery while on vacation).
There are two important tips to consider when trying to balance a family vacation budget:
1. Vacation packages - Some types of vacation packages "bundle" costs together. Often this offers you a bit of savings. More importantly, you'll pretty much know the overall cost of your vacation without having to be a financial wizard.
- All Inclusive resorts- $150-$400 per day includes: all of your meals, alcohol & nonalcoholic drinks, resort activities, nightly shows, child care, tips and taxes.
- Family cruises - Prices start at $50 per person/per day and include: transportation to different ports of call, your cabin, all your meals, some beverages, shipboard activities, nightly shows, child care and taxes.
- Guided Tours - Prices start $200 per person/per day and generally include: local transportation, accommodations, sightseeing admission, some meals, services of an experienced tour guide.
- Disney Vacation - Prices here average around $150 per person/day for a hotel room in Disney World, park admission each day and a meal plan.