Creating a travel budget may not sound like the most exciting step in planning your next trip. However, it can be a beneficial process.
A travel budget serves several needs. Before a trip, it can help you figure out how much money you'll need to save.
Once you're traveling, especially for more than a week or two, it can help you avoid spending more money than you initially planned. Even if you don't stick to it strictly, you're better off knowing how much you can spend than not paying attention at all.
Backpackers are always looking for cheaper alternatives or travel hacks to make their trips more cost-efficient and, therefore, last longer.
Two things to consider when building your travel budget. First, sometimes spontaneity pays off. Other times, research will save you tons.
Second, if you are willing to sacrifice certain aspects of your lifestyle while backpacking, you are almost guaranteed to find cost-friendly alternatives at every stage of the budgeting process.
Backpackers are spontaneous but calculated. We're willing to sacrifice, which opens us up to situations outside our comfort zone. That's what makes this travel life fun.
Here's the strategy Dave, Go Backpacking's founder, and I use to build a budget before each trip. We've included step-by-step advice on creating a travel budget, using a pretend two-week trip to Western Europe as an example.
Before we continue, note that not all budgets are the same, and specific aspects of building a travel budget will vary greatly depending on who you are, where you are going, and how long you will be on the road.
What To Include in Your Travel Budget
Airfare
Building a travel budget starts with calculating your flight cost. We take several steps when starting our flight search.
First, you need to know all the tools and search engines available to you. To our advantage, dozens of booking agencies are available online today.
We tend to use booking engines rather than booking directly through the airline or using personal travel agents. These sites do the heavy lifting for you at a fraction of the cost, without unreasonable agent commission fees.
They include:
Momondo is my personal favorite because I think it tends to offer the cheapest fares.
Some discount airlines don't allow their fares to show on these platforms, so keep that in mind. They are an excellent place to start, but checking individual discount airline sites can also save you money.
Numerous internet myths claim to offer tactics to help these search engines find cheaper flights.
Myths include clearing all of your browser cookies before you log on to reserve your seat, booking flights on Tuesdays because (supposedly) fares are lower, or even booking your flight from a different device than the one you've been searching on.
Whether or not these myths are true is debatable. You certainly won't save big every time, and we've found that most of these myths play little or no role in saving money.
Instead, to save big on flights, we recommend our ultimate travel hack: travel rewards credit cards.
Flying to Europe from the USA can be affordable for the budget backpacker. We tend to travel during the off-season to get cheaper fares.
Still, even in the summer, Norwegian Air is one of the most affordable airlines for booking a trans-Atlantic flight. Start your search there.
Accommodation
Where you stay will depend on your budget. As backpackers, we will generally find the most accommodating low-budget option. Traditionally, that is in hostels.
Hostelworld
For research and accommodation reservations, we spend almost all of our time on Hostelworld.
It is an easy-to-use platform that gives you customer reviews and ratings on anything from cleanliness to the atmosphere of the space (which, for hostels, is one of our favorite ratings to look out for).
Airbnb
There are other options we look into, as well, though. Depending on your destination, Airbnb can sometimes be your best bet.
Some hostels list their prices differently on Airbnb than on Hostelworld. Other times, in more remote places, a homestay or guesthouse may be your only option.
Airbnb is not always the most cost-efficient option, but it's certainly better than settling for an expensive hotel.
Couchsurfing
Once you've got some backpacking experience under your belt (or not), you may want to try Couchsurfing. For those on a strict budget, Couchsurfing is your best option, as it's free!
More Popular Options
Other great platforms for budget (or free) accommodation include:
- Agoda (especially in Asia)
- Workaway
- Worldpackers
- WWOOF (World Wide Opportunities on Organic Farms)
- Housesitter
- Many of the flight search engines listed above
For a trip through Western Europe, Hostelworld is almost always your best and easiest bet.
Make other parts of your budget go further by choosing a hostel that offers complimentary breakfast, free Wi-Fi, kitchen access, and a convenient location near the city center.
I usually find a hostel that mentions easy access to public transportation. The last thing you want is to pay a steep taxi fare to/from an affordable hostel.
Local Transportation
Calculating transportation costs while at your destination is often forgotten.
Whether you're backpacking Europe and traveling from country to country by train, taking thirty-hour bus rides in Southeast Asia, or using public transportation or taxis to get around the city, you must keep these costs in mind.
It's impossible to budget exactly how much you need for local transportation because plans can change quickly. Give yourself leniency here, perhaps by using a range instead of a single amount.
When you're working through estimates or adjusting numbers on the fly, simple browser-based tools can speed things up-try it here if you want a quick way to handle calculations while planning your trip.
I like several tools, too. For European travel, I can't recommend Omio (formerly GoEuro) enough.
This app offers every travel option between European cities, with plenty of filters to narrow down choices to your preferences.
Transportation budgets in developing countries are often hard to plan in advance. There isn't a single central tool like in Europe, and there isn't much information online.
In our opinion, it is not worth the hassle of researching every bus or train you may or may not take when there is no central resource. This is the time to use the range budgeting technique.
A simple Google search ("X-location to X-destination by bus/train") will generally lead you to a TripAdvisor or Lonely Planet message board where a transportation fare conversation has already been started -- no matter where you are trying to get.
Just be wary of outdated information. Regardless, it should give you an idea of fare costs so that you can make an educated guess.
Food and Drink
How much to budget for food and drinks depends largely on your personal preferences.
A traditional food enthusiast who loves morning coffee and dessert with dinner will need to budget more than a backpacker who doesn't drink coffee and can survive on hostel dinners night after night.
Many backpackers tend to self-cater, budgeting mainly for hostel dinners (make sure each hostel you reserve has a kitchen).
But they'll also leave enough in the budget for a traditional meal or two when meeting new friends who want to eat out.
Alcohol can also play a significant role in how much you spend on drinks. If having a few beers (or buckets in Thailand) each night is essential to the travel experience, factor that in.
It's better to be realistic when creating your budget than to pretend you don't enjoy certain things.
Assess what kind of eater and drinker you are, what kind of sacrifices you are willing to make, and how much you need to budget for your trip.
To find relatively current costs at restaurants and other aspects of traveling in any particular city (especially Western cities), use the cost of living calculator that Numbeo provides.
Social Life
Are you a party animal? An introvert who prefers to read at the end of the day? Budgeting for a social life tends to depend heavily on the kind of person you are as well.
Is the social life inside the hostel common area enough for you, or do you like to hit the town for beers and dancing?
Be honest with yourself and your desires. Budgeting for your social life is one of the easiest parts of building a budget because it is independent of YOU.
Introverts, don't be too self-isolating. You may never get back to a particular place or meet so many others from around the world again. Enjoy it while it lasts!
Sightseeing
This part of your travel budget can be relatively easy to plan if you are willing to do the research beforehand.
Research the cities you will be traveling to before you leave, figure out what you want to see and do, and calculate what each costs.
Don't put all of your faith in the information you find on the internet. However, most sites are in the ballpark of current admission costs and fees.
TripAdvisor is, generally, reliable. I like reading reviews of individual attractions on TripAdvisor because people sometimes include updated information and prices. You'll also sometimes find tips on how to make experiences cheaper.
Typically, TripAdvisor lists prices for expensive tours, which may not interest backpackers. Budgeting for specific cities and attractions will take a bit of digging.
In Western Europe, we start by finding the top attractions in any city with a Google search for "top attractions in X."
Instead of using TripAdvisor, which often ranks at the top of Google search results, look for advice from bloggers.
You'll find that every city (especially Western Europe) has at least a few travel bloggers writing about the top attractions. Make a list of a few attractions in each town that interest you.
After that, you'll need to do the legwork: find each attraction's website and check admission prices.
For cities where you plan to do a lot of sightseeing, you may find a sightseeing pass that bundles several top attractions and saves you money.
This step can be time-consuming, depending on how detailed you want to get. If you can afford it, having a budget range can be less stressful, as it eliminates the need to worry about every specific detail.
Passport, Visa Fees, Immunizations, and Travel Insurance
These fees entirely depend on which country you're from, where you are going, and how long you plan to stay in each country.
We can't give individual advice, but remember to account for these fees and do your research before leaving home!
This is the easiest part to budget for because information on official government websites is reliable.
We usually start this part of our research with a simple Google search, "Visa for (your nationality) traveling to (your destination)."
Find a government website and use it to build your budget and list of visa applications.
Many times, visa and passport applications take days or even weeks to process. Do your research ahead of time.
There's no way around passport and visa fees. Head to your local post office (in the U.S.) to pick up a passport application.
If you're a U.S. citizen traveling through Western Europe, you'll be glad to know there are no visa fees as long as your trip is less than 90 days. There are also no immunization fees.
And don't be fooled into thinking you don't need travel insurance.
World Nomads is the best travel insurance for backpackers and will cover you throughout your entire European trip.
Make Space to Splurge
Often forgotten while budgeting is what we call the "splurge budget." We add to our budget for those times we can't resist that Italian gelato in front of the Colosseum in Rome or a private hotel room in Bangkok after a long flight.
Be disciplined about splurging, but don't force yourself to withstand all personal comforts or luxuries. After all, you're on vacation and living in the moment. Splurge a little when in Rome!
Unexpected Expenses
Ah, the unpredictable. Part of traveling as a backpacker is being flexible enough to bounce back from the unexpected, including financially.
We usually allocate more funds to this portion of our budget than we expect to need, but still within our means. Chances are, the unexpected expenses will be small and (maybe) frequent, adding up quicker than you think.
That's why good financial planning matters on the road. A financial buffer helps keep a surprise bus fare or last-minute hostel stay from derailing your trip. Tools such as an AI financial planner can help you review spending from linked accounts and monitor your budget. Check your remaining travel funds regularly so you can adjust your plans while setting aside money for unexpected costs.
Related: How To Budget for an RV Road Trip
Documenting Your Travel Budget
To keep all the details straight, we suggest using a free Google Sheet (spreadsheet). Keeping your budget in the cloud makes it easy to access from the road, whether you're using a laptop or a smartphone.
Create a separate tab in the spreadsheet for each city you plan to visit, and reserve a column for each budgeting aspect listed above on each tab.
Also create a tab for pre-travel expenses, including visa costs, passport fees, immunization costs, and travel insurance rates from several insurers. It's best to write these fees down so you remember to include them as part of your actual budget.
Maintain a total running budget, as well as a budget for each city. You will notice through your research that a one-size-fits-all budget is unrealistic. Each country will require a separate budget.
Consider making a "Cost per Day" estimation for each city/country. This will help you stay within your budget while traveling.
Leave notes for yourself and use this as your travel Bible while on the road. Refer to it any time you're unsure what you are being asked to pay.
Below is an excellent example of a travel budget. Go Backpacking's founder, Dave, created it on his first RTW trip in 2007.
Don't compare specific prices, though, because currencies have fluctuated, and the costs have increased due to inflation since his trip.
Dave's RTW Trip Budget Spreadsheet
You can also see a summary of his actual costs for that same trip.
Staying Within Your Travel Budget
Creating and maintaining a travel budget is a big part of planning your first backpacking trip. Take it seriously, but know to give yourself room to breathe, and don't make staying within your budget the end-all, be-all of your trip.
Have fun, let loose, and do your research beforehand so you can relax and enjoy your trip as it happens.
