Vacation Splurge? How to Get Your Budget Back in Shape

Money Saving Tips, Personal Finance
Vacation Splurge? How to Get Your Budget Back in Shape

Even if your vacation was a blissful break, coming home to a blown travel budget can quickly erase that happy glow.

It’s easy to overspend when traveling. “I deserve it,” you tell yourself. The meals out, extra drinks, a room upgrade — these costs add up, and quickly. No one wants to break the vacation spell with strict budgeting back at home, but the best time to start recovering is right away.

The first step: Be honest about the damage. Figure out how much you overspent and where it came from — whether it was cash from a bank account or new charges on a credit card. Then, make a plan to pay back that account.

Stop spending and repay yourself

Set a realistic goal based on how much you spent over your budget and how long it will take to rebuild the account, then make it a priority to pay yourself, says Maleah Stephens, a certified financial planner in Nashville, Tennessee.

“For example, if you blew your budget by $1,000 and you want to pay yourself back over a six-month period, set up an automatic transfer to your savings account for $166.67 a month,” she says. These payments don’t have to go into savings; direct them to where the extra vacation money came from.

If splurges were put on a credit card, focus there first. Although this spending may have earned points or cash-back, those benefits are offset by the interest that will accrue if you can’t pay your balance off.

“It’s easier to make sacrifices on spending when you can still recall exactly how good those cocktails by the beach were,” says Marie Thomasson, a financial advisor in Los Angeles, who recommends a post-trip ban on unnecessary spending.

Skip or cut way back on all optional expenses for the next few weeks or months. Remember, this financial diet won’t last forever.

Next time: Plan and set limits

Once you’ve recovered and are dreaming of the next vacation, apply what you’ve learned. Compile your new vacation budget well in advance and be realistic. This time, write down all expected costs, estimating first and adding specifics as you book flights and accommodations. Set clear and reasonable limits for all expenses, but don’t aim too low or you’re bound to overspend again.

“I advise my clients to put their pre-booked transportation on a rewards credit card, but their spending budget on a [prepaid] debit card” to create a built-in cap on expenses, says Hali Panella, a travel agent in Austin, Texas, whose solution is particularly good for those prone to impulse purchases.

From meals to lodging, the more you plan, the less likely you are to overspend.

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