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As seen in Transitions Abroad Magazine July/August 2007
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It’s Going to Cost How Much?

Tips for Drafting a Reliable Travel Budget

Picture yourself in the legendary Ngorongoro Crater in Tanzania just after dawn, sitting in the whicker basket of a red and yellow striped balloon. After chuff-chuff-chuffs from the burner fill the balloon with hot air, you ascend slowly, sipping chilled champagne as you watch lions, rhinos, and elephants drift past on the savannah below. Now picture yourself left behind, standing on the floor of the crater gazing up with envy, wishing you’d budgeted money for this adventure.

As college-age backpackers, many of us traveled on a bare-bones basis and kept going until our money ran out. That sort of trip required eating on the margins of nutrition and hygiene, living occasionally in barely habitable accommodations, and foregoing most treats. Sound like fun? It was back then, but now time, health, and love of adventure are more important than a few dollars. After all, one reason to travel is pleasure. If you make informed choices, bargain a bit, and skip overpriced tourist frills, you can easily have a fine trip within a reasonable budget—one that includes hot air balloon rides.

Most people are about as fond of figuring budgets as they are of calculating their taxes. But, as with taxes, you’ll pay a penalty if you don’t do it right. Let’s find out how it’s done.

Norway isn’t Guatemala

We’ll begin by acknowledging one of life’s realities: travel costs vary wildly around the world, and your choice of destinations must take this into account. Travelers may choose to write off Japan, most of Europe, and a few other high-cost destinations until the U.S. government stops running up huge deficits and the dollar becomes more robust.

A week touring Norway can easily cost more than a month in Guatemala. Fortunately much of Latin America is a relative bargain, even inexpensive (e.g., a private room for two, and usually a private bath, for $8 to $25 a night). But there are still major cost variations between, for example, a highly-promoted Mexican beach resort and a Nicaraguan seaside village.

The cost of travel in a given country also depends in part on the strength of your currency in relation to that country’s. In the 1960s, when the U.S. dollar had some muscle, Europe on $5 a day was very possible. Today, when a martini can cost $25 in some European capitals, imagine what you’d spend for a serious night on the town.

You think New York City is expensive? According to CNNMoney.com, it ranked only 10th among the world’s most expensive cities. Moscow (where a cup of coffee is $5.25) heads the list followed by Seoul, Tokyo, Hong Kong, London, Osaka, Geneva, Copenhagen, and Zurich. San Francisco was 29th; L.A. was 34th.

A nice 3-star double hotel room is easy to find for $50 in Antigua, Guatemala, but you’d pay that in Amsterdam or London for two dorm beds in a hostel. That $10 taxi ride from the airport in Mérida, Mexico will run more than $100 in Madrid. A haircut that costs $5 in Colon, Panama costs $65 in Tokyo. A simple fast food meal that costs only $3.60 in Mexico City will zap you for $13 in Oslo.

The Accountant’s Budget

Which is the chicken; which is the egg? Do you plan your trip by choosing a destination first or do you start by drafting a budget? That’s actually a trick question. Obviously, the destination matters most, so if money didn’t matter that’s what you’d focus on first. But if money does matter, you’ll have to bother with a budget. One way to draft your budget, perhaps the one a responsible accountant might calculate, is to choose the maximum amount you’re comfortable spending on a trip. Then bump that up a bit because of all the money you won’t be spending at home for food, entertainment, utilities, and so on.

Let’s suppose you choose to spend $2,500 and your roundtrip transportation will cost $900. That leaves you $1,600 to spend “on the ground.” Use the checklist (see sidebar) to estimate local daily costs and divide that into $1,600. If that allows you 14 days, great. But what if it permits only eight days and that’s just not enough time to see everything you want to see. Does that mean you’re condemned to yet another trip to Florida?

The Romantic’s Budget

Not at all—because there’s another way to approach a budget, one a romantic would prefer. Choose your favorite destination and figure out how many days it will take to experience everything on your “must-see” list. Next, use the checklist to calculate how much that number of days will cost. Now persuade yourself to spend that amount. If you absolutely can’t make the case, or the cupboard is too bare for the grandest scheme, cut back on the level of accommodations and class of tickets, and figure out which areas or attractions you can cut—until you have a cost you can live with. The romantic will find a way to afford what she or he really wants.

Constructing the Budget

List all the things you expect to spend money on, then plug in the length of the trip and local cost estimates. Let’s practice by assuming certain expenses for a hypothetical 30-day trip in Central America:

1. Pre-departure expenses. These include the cost of visas, film and other photographic equipment, medical protection (e.g., shots, prescription, and over-the-counter medicines), guidebooks, new clothing, and other gear. Let’s estimate pre-departure expenses for this trip at $450.

2. Airfare. Assume a cost for airfare (getting there, traveling around, and returning home) of $900.

3. Other transportation. This includes local buses, taxis, and other non-air transport. Your working itinerary shows how often you’ll need local transport and guidebooks give you a reasonable idea of the costs. Estimate $100.

4. Lodging and meal expenses. The best cost estimates come from the Internet, current guidebooks, and from people who’ve recently returned from your destinations. Of course, before you’re actually there, it’s hard to know exactly how much you have to spend for meals and lodging that will make you happy. Nevertheless, here’s the process for estimating these costs for a 30-day trip in Central America.

  • Subtract the number of days when you’ll pay no separate charge for lodging, such as when you’ll be trekking or on an overnight plane or train. Let’s say there are five of those days, leaving 25 days. An average cost of $40 per day (easy to do in Central America) times 25 gives you $1,000. Adjust that upward by 15 percent to cover price escalation and an occasional splurge and budget $1,150 for lodging.
  • An average cost of $20 per day for meals times 30 gives you $600. Adjust that upward 15 percent and budget $690. Remember that you’d spend at least that much in 30 days at home.

5. Special experiences. If you don’t plan for them, paying for special experiences can wreck your budget. I’m referring to things like the cost of scuba diving, sailing, trekking, rafting and so on. Most of these opportunities will surface during your research but you won’t recognize some as “musts” until you get to your destination.

How much do these special experiences cost? Check the Internet and guidebooks, call national tourism offices, ask a knowledgeable travel agent or someone who has been there recently. If you can’t turn up anything, take a guess. I suggest three rules of thumb: (a) special experiences in developed countries cost more than you might expect and in developing countries even less than you might expect; (b) if modern technology is involved, such as a helicopter, they’ll be fairly expensive; and (c) prices quoted by a travel agent for special experiences will almost certainly be higher than you’ll pay if you make your own arrangements abroad.

For our hypothetical trip, assume four days of scuba diving and several day trips with guides. Estimate $550.

6. Miscellaneous. This category includes odds and ends: clothing you buy on the road, souvenirs, toiletries, beverages, books, postcards, postage, tips, and so on. Your estimate here is a matter of personal preference and available money. Whatever you estimate, add 25 percent. For this hypothetical trip, budget $400.

If you want to fine tune your budget, find out whether your own currency has grown significantly stronger or weaker since the information you’re relying on was published. Stockbrokers have this information. For current exchange rates, check the Internet (www.oanda.com/currency/converter/) or the Currency Trading table in the third section of The Wall Street Journal. In recent years the weakness of the dollar has made Mexico and Central America very attractive when contrasted with Europe.

To be even more conservative, add up all the categories and add an additional 15 percent to the total to cover surprises and spontaneous splurges.

If the grand total is more money than you have, don’t skip a beat. The purpose of your estimated budget is to simulate reality ahead of time and to put you on notice that you have to cut some expenses or redesign the trip.

In summary, avoid an absolutely bare bones budget if you can. Leave room for decent food and shelter, small pleasures, and special experiences. Before you cut back on your trip, consider investing just a bit more in your lifelong memories.

Checklist for Building your Budget

Pre-Departure Expenses
$___________passport, visas, and photos
$___________guidebooks
$___________camera, film, filters, other photo equipment
$___________luggage, daypack
$___________new clothes
$___________travel insurance
$___________gear (binoculars, money belt, etc.)
$___________health care (medicine, shots)
$___________toiletries
$___________reading material
 
Transportation
$___________airfares
$___________other (trains, buses, etc.)
 
Meals and Lodging
$___________en route
$___________daily lodging
$___________daily meals
 
Special Experiences
$___________scuba diving, rafting, etc.
$___________entertainment (sightseeing, tours, etc.)
 
Miscellaneous
$___________souvenirs, gifts, tips, laundry
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