I had previously written about how not planning properly for a vacation can ruin your time off and end up being expensive. Missed flights and non-refundable hotel nights when you have a change of plans are costly indeed, but even if everything goes smoothly, have you budgeted for the true cost of a vacation?

At Money Manifesto, Lance Cothern wrote about how he went on a cruise that initially cost $279 per person – a price that he reduced even further to $199, after a credit card rebate and a boat credit were taken into account.

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But then, with all the expenses to get there, park, drink (and otherwise have fun onboard), explore the locations the boat stopped at, give tips, etc., he ended up paying $641 per person!

More than three times what he paid for initially. If you aren’t ready for that, you can end up charging your card and paying for your vacation over many months, with interest on top.

And like any purchase on credit, paying for something you've already enjoyed is not pleasant.

It can spoil the memory of a vacation. So let’s make sure you have everything covered.

Before the Vacation

Before you go on vacation, you will have a series of extra expenses related to your trip. They can include, among other things:

  • All the add-ons they sell these days when you book a flight or a vacation: cancellation insurance, baggage fees, priority boarding, extra leg room…
  • Buying a guidebook to study your destination.
  • Seeing a doctor for malaria medication, a rabies shot, or other prescriptions.
  • Getting a new passport.
  • Buying a new piece of luggage, sunscreen, and adequate clothing (for the heat or for the cold).
  • Replacing your hiking gear or shoes; buying a tent or a mosquito net; and so on.
  • Going on a refresher diving course, so you can dive when you get there.

You haven't even left home, yet you are already dozens — if not hundreds — of dollars out.

Because vacations are a recurring event, you should be budgeting for them every year. Booking a summer trip in September will allow you to not only enjoy the early bird pricing, but also to pay for these extras as you go. You can ask your parents to give you the guidebook or a new sleeping bag for Christmas.

Setting aside a little bit of money every month will be easier than having to face all these expenses at once. With more time ahead, you also have the opportunity to look for deals online, such as long-term parking at the airport. Expenses will keep piling around the core vacation, so early preparation is key.

During the Vacation

During the vacation, you will also need quite a bit of cash to cover all the little things that were not part of your “all-inclusive” package. Typical expenses include:

  • Taxi or bus to go to the airport. (You might budget for a bus before realizing it’s a red-eye flight and there are none.)
  • Kennel for your pet.
  • Extra activities.
  • Credit card foreign transaction fees.
  • Tipping.
  • Souvenirs.
  • Postcards and stamps.
  • Roaming fees.

Most of these you can’t really skip because after all, you are on vacation, and not being able to leave the hotel to explore the area would be pretty dull. But if you save ahead of time, you can at least try to pay cash for everything.

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During the year, if the dollar gets pretty strong, you can exchange your currency for the one in place at your vacation destination. That will guarantee you no surprises about the rate, although it is always a bit of a gamble, and the rate might be better over there when you bring your dollars.

You can also get a card that won’t charge you foreign transaction fees (Charles Schwab, for example), and avoid carrying too much cash on you. Avoid roaming fees like the plague – instead use the hotel’s Wi-Fi to Skype home.

Plan ahead and decide which activities you really want to do. One or two big-ticket outings during the week, paired with lazy days by the pool and walks around the city should be plenty. How much will that cost? Pay in advance if you can, or bring just the right amount of cash to avoid temptation.

Final Thoughts

There is a fine balance between having fun on a vacation and overspending just because that is your modus operandi to relieve the stress of a year spent working hard. Vacations are mostly a time to enjoy being with your friends or around family, and there is no obligation to spend tons of money to have fun. But if you do decide to splurge, make sure you can afford it.

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Vacations are mostly a time to enjoy being with your friends or around family, and there is no obligation to spend tons of money to have fun.