How to Create a Family Vacation Budget That Actually Works

If you don't, you'll be dealing with the credit card bill all year.

After months of the daily grind, a nice vacation with the family can be a great way to unwind and recharge. Problem is, it’s also one of the fastest ways to dig yourself a hole financially. Consider this: According to a survey conducted by LearnVest last year, the average American spends 10 percent of their annual salary on getaways. Ten percent!

The best way to avoid kneecapping yourself for the rest of the year is to sit down and create a realistic budget for your trip. The more accurately you project your costs, the better idea you’ll have of what destinations you can hit and how long you can stay there without breaking the bank.

Here are some tips for developing a budget that keeps you in line:

Save ahead of time

No matter how relaxing your vacation is, the benefits are short-lived if you rack up substantial debt in order to travel. That’s a lesson a lot of Americans learn the hard way. The LearnVest survey found that 74 percent of adults go in the red in order to fund their vacation, racking up an average of $1,108 in debt.

Rather than relying on a line of credit, you’re much better off saving up ahead of time. Making regular deposits into a separate savings account is a good way to take away the sting of a big vacation. Consider, for example, that socking away $100 a week throughout the year will give you a $5,200 budget with which to work.

Start with your largest expenses

When carving out your budget, start with the biggest expenses first. Usually, that means your airfare and hotel accommodations. Sites like Kayak, Travelocity, and Expedia help you compare fares and hotel rates from multiple providers at once, making the process a whole lot faster and more rewarding.

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And if there are any major attractions you plan to attend, try buying tickets ahead of time. The more expenses you can account for in advance, the more accurate your budget will be. This also happens to be a great way to avoid long lines at the ticket booth, too.

Give yourself an allowance

Day-to-day vacation expenses are what really add up. Once you have fixed expenses like airfare and hotels figured out, you need to allot for smaller purchases like meals, taxi rides and souvenirs. Keep yourself honest by giving yourself a daily budget for these discretionary expenses.

One plan to consider: take out cash from your bank account and securely store the allowance in separate envelopes for each day of the trip (though it may not hurt to have a card in your wallet, just in case). Once your allotment runs dry, you may have to say no to a high-priced show or an extra glass of wine at dinner — but you’ll thank yourself later.

Build in a little cushion

You know what the big-ticket items are going to be when you travel, but it’s easy to overlook those smaller outlays that can add up over the course of a trip. Think airline baggage fees, hotel Wifi charges and parking costs. As much as you might try, it’s hard to predict every expense you’ll incur along the way, so pad your numbers by 10 percent or so to make up for it.

Know the exchange rate

Traveling abroad brings its own planning challenges. Among them: the fact that you’ll be paying for a lot of your bills in a different currency. It doesn’t hurt to check conversion rates for the country you’re visiting ahead of time, to get an idea of how much things there cost.

The website Budget Your Trip goes a step further by giving you the average daily price for things like food, local transportation and entertainment, based on a survey of tourists to each country It’s a ballpark figure of course, but certainly a better alternative than blindly guessing.