Monday, May 27, 2013

All About Budgets Week 2: Estimating How Much Your Trip Will Cost

If you were afraid I was going to start pulling out screenshots of excel spreadsheets and complex formulas you can breathe easy. Although I do love a good colour-coded spreadsheet, the basis of any budget is simple addition and subtraction This makes it just as easy to track with a pencil and paper as it does with a computer - you just have to make sure you actually DO plan and track your spending.

Last week Travis and I discussed how we saved up for our four month trip through Europe and mentioned that, before anything else in the planning process, we first decide how much we are comfortable spending. Then, once our budget is set, we can get creative trying to save money in some of the more expensive cities. However, before we can try to find ways to save, we first need to find out just how pricey some of these cities cost to visit. After all, how do you know your saving money if you don't know how much something normally costs?

Setting aside the budget we came up with last week, we then turn our attention to the actual countries and cities we want to visit. With a little research, it's possible to get a good idea of how cheap or expensive a destination is, and how much it costs to get there, before confirming it on your itinerary. We break the budget down for each country into the following four areas: Accommodations, Food, Transportation, Attractions.

Easily one of the largest chunks of a traveler's budget, accommodation prices can vary significantly in each city, and unfortunately price doesn't always equate to quality. We've stayed at some lovely family run pensions and bed & breakfasts for a great price and some dingy hotels for more money than we'd like to admit.

When it comes to estimating accommodation costs in a city we like to turn to or to help with the research, using approximate travel dates to account for seasonal variances in prices.We like these sites because the reviews are, from our experience, pretty reliable, and we can filter the reviews based on our specific traveler type (we're a young couple and have different requirements than my parents, for example).

**Just a quick note on customer reviews on travel websites: Ensure you read the review, and not just glance at the star or scale rating. We've found some wonderful places that people rated poorly because of issues we aren't concerned with such as too many stairs or the lack of an elevator. We are young and don't mind climbing some stairs to save money; however, some travelers may need the assistance of an elevator or dread the idea of walking up a half dozen stories to their room after a full day of walking. 

So how do we actually figure out our budget for a city? Well we type the city and approximate dates in whatever aggregator we are using (be it Booking, Skyscanner, Agoda, etc). We then sort our results by price (in our case, by price for two people) and begin looking at the results. We tend to scroll down until we've passed about 3 or 4 places that have our minimum rating (for booking that's usually an 8/10 - again refer to our note above) and take that price as our "budget" for the city. 

        The 4th good place in Sarajevo we passed on the page gave us our budget of 40 dollars/night for Sarajevo
It's also important to point out that one of the best ways to save money is by booking early. Many websites now have rooms offering FREE cancellation - so if you are fairly sure of your dates and spot a good deal, you can book it when you feel like it and not have to worry if your plans change or a better deal pops up!

In some countries and cities food is one of the main attractions (think Piri Piri in Portugal or pasta and pizza in Italy), and Travis and I love to try new cuisines. Keeping this in mind, we also try to balance the cost of eating out with the cheaper option of grabbing a baguette and some mortadella from a local market. The way we figure it, you might as well have a splurge on a real authentic meal once every couple days rather than eat three mediocre meals every day.

Fresh food from a market in Campania makes a cheap alternative to a meal out.

To estimate food costs in a city we tend to rely on Wikitravel, and although it isn't always the most accurate, it is good enough for estimating costs to determine if a city is affordable on our budget. As a rough guideline, we've found that for us $40/day is a reliable estimate for most of the expensive European countries, while mid-range countries sit at about $35/day and the cheapest countries are about $30/day (for both of us).

The thing to remember about food is that it is one of the easiest portions of your budget to control on the road. In Paris where everything was extremely pricey, we frequented the grocery store and affordable ethnic restaurants instead of fancy french cafes. It was a decision made in the moment to save our budget and allow us to spend more on shopping for Christmas gifts to bring home. In contrast, when we found affordable restaurant meals in Greece we ate out regularly, taking advantage of the affordable fresh seafood and local specialties. Although it's important to estimate how much you'll spend to feed yourself each day, remember that it can be quite flexible, especially with the addition of a kitchenette or kitchen access in your accommodations.

With accommodation and food prices filling up our budget, we turn our attention to transportation, where there are a few different areas to consider. Although your initial flight into the area will take up a significant portion of your budget, we spend more time researching how to get around within a city or country without breaking the bank and rely on for this initial flight purchase. 

While we try to walk as much as possible, it's a great way to save money, intracity travel, or getting around within a city, is an important part of budgeting for larger city centres where attractions are widely spread out. To estimate our costs, we not only look at the price of a transit pass but also how much we are likely to use it. While in London, we relied on the train system a lot to access the various museums and attractions, and as a result we budgeted accordingly. However in Seville, Spain, we walked everywhere and didn't have any intracity transportation costs.

When it comes to travel between cities within a country, or country to country, we rely on Wikitravel and Google searches to determine who the main transportation providers are operating in the area, be it train, flight, or bus. It's then possible to look up routes and estimate costs. 

The last category of our budget is attractions, or the wonderfully fun things you came to this far off place to do! To estimate how much we will likely spend in each city, we like to start with a rough list of everything we want to see and do using sites like Wikitravel and other travel blogs. This list also helps us determine how long to spend in each city and how much we will rely on transportation. 

Once we know what we'd like to see, we can easily tally up the entrance fees and costs. We've also found that we never get to absolutely everything we'd like to see and do, and lots of attractions in a city can be free, so we rarely overspend in this section of the budget.

After we've generated a solid estimation of the costs to visit the places on our itinerary, we like to total them by country as well as overall, to get a good idea of which areas are pricey and which are cheap, and then it's time for some tough decisions. Likely, a particular city or country is significantly more expensive than others, or getting to one of your destinations is difficult or over budget, or perhaps worst of all your entire trip is way over budget. When it comes to planning our next trip, we've gone back and forth on the idea of returning to Greece for the simple reason that it is much pricier to get to in the off season. 

Although it isn't easy to eliminate a destination purely for financial reasons, we try to take comfort in the fact that we will one day make it back, even if it is for a shorter visit when we have careers and families and responsibilities.

Finally, after all this estimating, we take our total and divide it by the number of days we will be away to get a per day cost, broken down into each of our four categories. We found that having this daily number in the front of our minds made it easier to casually track how well we were sticking to our budget while on the road and also ensured that our budget was part of the conversation when making purchases big and small. 

You may have noticed we don't have a spot in the budget for the gifts and souvenirs you will likely want to buy while away, the reason being that it is purely discretionary and therefore controllable. We also try to keep this spending to a minimum because of a lack of space in our backpacks. Although not included on our initial estimate, we do track this spending, as well as all spending, once we are on the road. 

Well there you have it, the not-so-short-story of our budgeting process. For reference, we planned to spend $150 per day for 120 days during our trip last fall, broken down into $60 for accommodation, $40 for food, $20 for transportation, and.$30 for attractions (this is an average per day cost, some countries/cities are more or less expensive).

Next week we'll share our 2012 budget and actual costs for four months in Europe and discuss which destinations were the easiest on our pocketbook and which left us feeling financially drained. 

If you missed Week 1 of our budgeting series, all about saving for travel and why setting a realistic budget is so important, you can find it here.

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Calli and Travis returned from a four month trip through Europe more excited than ever to hit the open road. Who knows where they'll end up next...

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