From Flights to Festivities: 5 Budgeting Tips for Holiday Travel Costs
Written by
Cynthia Measom
Edited by
Jenna Klaverweiden
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Being smart about budgeting is essential when planning holiday travel. Between flights, hotels and meals, costs can add up quickly, and delays or last-minute changes can add to the expense.
Whether you’re planning ahead or preparing for the unexpected, these budgeting tips can help you manage holiday travel costs.
Also see five signs you’re spending too much on travel expenses.
Start Planning Early
“Consumers should begin planning their holiday travel budget at least three to four months in advance — ideally starting in August or September,” said Kevin Shahnazari, founder and chief executive officer of FinlyWealth. “This provides ample time to create a strategic savings plan, compare travel options and take advantage of early booking discounts.”
This also allows travelers to break up the cost into smaller pieces. “By starting early, travelers can break down the total anticipated expense into manageable monthly savings targets, reducing financial strain,” Shahnazari said.
And if you didn’t start as early as you wanted this year, be sure to keep this in mind for future trips.
Set Up a Dedicated Travel Savings Account
Julie Beckham, assistant vice president and financial education development and strategy officer at Rockland Trust, said it can be helpful to start a separate holiday fund so you aren’t interfering with your regular savings.
“It also gives you a set amount of money, versus dipping into the emergency fund or money you use to pay your bills,” she explained.
Shahnazari suggested that when choosing a dedicated travel savings account, you should prioritize features like high-yield interest rates, no monthly maintenance fees and easy transfer capabilities. He said to look for accounts that offer the following.
- Competitive annual percentage yield (APY) rates
- No minimum balance requirements
- Instant digital transfers
- Optional automatic savings features
- Integration with budgeting apps
Take Action If Behind on Saving
“If you’re late to the game this year, I recommend researching your destination as soon as possible to ensure it’s feasible with your current financial situation,” Beckham said. “You may realize hotels are booked or surging out of budget; however, there may be more affordable options available like Airbnb or staying with friends and loved ones. Sometimes you can also get a better deal on flights by traveling on the day of the holiday.”
For those determined to catch up on their holiday travel savings, Shahnazari recommended aggressive and immediate action.
“Implement a temporary ‘travel tax’ on your spending by redirecting discretionary expenses like dining out or entertainment into a dedicated travel savings account,” he said. “Consider using cash-back credit cards strategically, converting rewards directly into travel funds. Additionally, look for quick monetization opportunities like selling unused items online or taking on short-term gig work to generate extra travel funds.”
Resist Overspending
Shahnazari pointed out that resisting holiday overspending requires a multilayered approach.
“Create a detailed, line-item travel budget with strict spending categories and use cash or a prepaid travel card to limit potential overages,” he said. “Set clear spending limits for each expense category — transportation, accommodation, meals and entertainment — and track expenses in real time using budgeting apps. Another effective strategy is the envelope method, where you physically allocate cash for different expense types, making overspending physically impossible.”
Beckham added that travelers should avoid the temptation to put travel expenses on credit cards and deal with it later. “It doesn’t feel great to spend the next year paying for a vacation or trip plus interest if you could put it off until you’ve saved up some funds to cover it,” she said.
Build a Financial Cushion for Unexpected Expenses
Shahnazari recommended aiming for a financial cushion that’s 15% to 20% above your estimated travel budget.
“This buffer covers potential emergencies like transportation delays, unexpected medical costs or last-minute accommodation changes,” he said. “For a $1,500 trip, this means setting aside an additional $225 to $300 as a financial safety net.”
More From GOBankingRates
