Personal Finance

Calculating The True Cost Of Your Vacations

Everyone loves a nice vacation – whether it involves driving a short distance to visit family for a couple of days or flying to the other side of the globe to go snowboarding.  The big problem with vacations however is the cost – most of us have budgets that are limited in some way and we want to get the best value for our vacation dollar.   Nobody wants to go into debt for a vacation.

Is it better to do a 3 week trip to Europe once every 2 years or go on 1 or 2 more modest vacations per year?

One trick which I have done in the past when trying to determine the costs of a trip is to figure out the “net” cost of the vacation.  Everyone knows that when you go on a trip that there will be quite a few costs such as airfare, gasoline, rentals (cars, accomodation), food, tourist attractions etc.  What some people don’t realize is that when they leave their normal life for a while that they are also saving some money which should be subtracted from the cost of your vacation.

Go on vacation and save money?  I don’t think so!

It’s true – and I’ll give you an example.  If your family normally spends $200 per week on groceries and household items then if you go on vacation for 1 week you will save $200 on groceries and household items.  When you calculate how much a trip is going to cost (or has already cost) you should factor in these “savings” to get the net amount of the trip.

For example if a family goes on a vacation and spends $2000, most people would to say the trip cost $2,000.  But if they factor in money that they didn’t spend when at home (let’s say $400) then the trip only cost a net amount of $1,600 which is significantly less.

Obviously you would need to have a very frugal trip to have an overall net saving by going on vacation but if the trip is reasonably modest then netting out your “normal” expenses could make the trip quite cheap.

Why do this?

One reason is that you like to know exactly how much things cost – I have always calculated the net costs for big trips and it makes me feel better to know that a trip was a bit cheaper than the gross costs.

Another good reason is that if you are trying to make decisions about future vacations, it’s good to have the proper cost information to make an informed decision.

Lastly – it might allow you do longer or more expensive vacations.  If you budget $2,500 for a trip and don’t subtract the $500 you would normally spend during that time then you will actually end up spending $2,000.  This isn’t a bad thing but it’s better to make that choice ahead of time.

How to do it?

Add up your expenses that result from you being at home.  Food, some utilities, gasoline, commuting expenses are good examples.
Don’t include any fixed costs – things like car insurance are going to happen even if you don’t use your car.  You don’t have to be exact with your figures – estimates are fine.

Some factors to think about

The two biggest factors which will influence the effectiveness of this “accounting” are:
1)  Daily cost of trip – The more expensive the trip then the less the “netting” will have an effect.  If you are spending $5,000/week in Hawaii then the fact that you are saving $350éweek by not being at home isn’t going to be all that significant.
2)  Daily costs of “nettable” home expenses – If your regular daily expenses are very low then removing them from the vacation cost won’t be as significant as it will for someone who eats out a lot and burns a lot of cash on a regular basis.

In the example noted in the first paragraph it’s likely that the cost of a 3 week trip to Europe won’t be reduced by a whole lot by netting the home expenses so it will still be an expensive trip.  However, if the alternative trips are cheap enough (the 2 weeks per year trips) then it’s possible that the cheaper trips might be very cheap in comparison to the Europe trip after netting.

This is significant because it the decision between doing shorter more expensive trips or longer cheaper trips (or more cheaper trips) might point more towards doing the cheaper trips since you will get a lot more bang for your buck especially after netting the costs.  Most people who are working don’t have a lot of vacation so for them – netting out the expenses will just let them budget more accurately for their trips.  People who have more time for vacations ie teachers, retirees can use this method to decide between the higher budget short trip or lower budget longer trip.


When going on vacation, subtract any expenses which you would normally incur while living at home but that won’t occur if  you are away.  This could alter your thinking on the type and length of trips you take.

23 replies on “Calculating The True Cost Of Your Vacations”

I like this idea of net expenses for trips. This year, we have been taking shorter, more local “staycations.” Another thing you might have to do (and we do because my husband is a student and works hourly), is subtract out how much money you lose when you take time off. This is primarily why we have done weekend trips; so my husband doesn’t have to lose wages with time off.

Rob – good point.

Miranda – excellent, I hadn’t thought of that. A contractor or free lancer would certainly have to consider lost wages for an extended vacation.

Great post. I took a trip to Cuba a couple of years ago for a week for $600. I’ve told people since that you couldn’t stay in Toronto for a week at that price (if you had to pay for a hotel and whatnot). Removing home expenses would make it an even better deal.

In “The 4 Four Work Week” the author talks about something somewhat along these lines. He talks about going and living places where you can live cheaper than at home (and he points out some of the same things that you do that there are expenses you don’t have to pay when you’re abroad. He talks about it longer term and the idea of saving things like cell phone and cable bills if you go and live in Berlin for 6 months).

Sorry folks, but I don’t think this is such a good idea. We go where we want to go, and we have a long list of places we want to go. We budget XXX$ per month to save up for trips (right now it’s $750/mo) and if No. 1 on the trip list is too expensive, we do No. 2. Of course, I scan flight deals all the time and if we see a good deal on a place we’d like to go, we pounce (Edmonton-Tokyo return for under $400 taxes in?). While there never think about how much the trip actually cost or our cost per day/hour. Sometimes, it’s tough. We spent a night at a mid range traditional japanese guest house in the mountains. $500 CAD a night, but it’s an experience neither of us will ever forget. In 20 years, we’ll have fond memories of being served sumptuous meals on tatami mats in our room, rather than the $500 we spent on the night.

We place a high value on travel and experiences. It’s important to us, so we save enough money to be able one big trip per year and a few smaller ones. You only live once and as you get older, it’s the memories and experiences that stay with you, not the cost. I’ve never regretted spending money on a trip.

Nobleea – thanks for the good comment. This analysis won’t apply for everyone. If you have more money than time and/or place a high priority on traveling then it won’t be of much value to you. However, netting out might allow you to spend a bit more on your vacation.

Its an interesting exercise but I’m in the same boat as Nobleea. When we vacation do some rough calculations on daily living costs for food (and we make sure we are calculating a good amount here), add in money for activities and then add some more as a cushion. However we never let this value hinder us from trying new things. We did this for our recent trip to Hawaii and ended coming in under budget.

One of my favorite things about saving for you vacation ahead of time and not calculating the “net cost” is you’ll find the vacation is completely paid for and your bank accounts are over flowing with excess cash.

MFD – to be honest I’ve never let this exercise influence my vacations. However it does make me feel better after the fact when I can reduce the vacation cost by netting out.

FP: Sounds like you feel a bit guilty about taking vacations! The money’s already spent, and whether you net out the cost or not, you spent the same amount of money. Semantics, I say.

I am just out of university. Recently I took a vacation to visit my parents for a week. My parents were nice enough to pay for my food and incidentals. I was able to get a very relaxing vacation for a net cost of negative dollars.

Trent – Ha..I still do those types of vacations. Visiting the parents is especially good if you have little kids (assuming they like to babysit).

Great breakdown of the cost of a vacation.

Even more to consider in this equation is your health and well-being. North Americans have been well documented with regards to not taking all their allotted vacation days. Don’t let burn out catch you, unplug and get out of town…


I always feel guilty spend more than I normally would when I am on vacation. For example, $3 for a pop when you can normally get them for a $1 at the local grocery store. However, I came to realize after a couple of years you wont remember how much you spent on that pop or that expensive restaurant you ate out that night, but you’ll always remember the experience at that time. I agree nobleea, vacation is about experience and not about finding the best deal, if you spend too much time budgeting/saving/calculating expense, you are missing the big picture.

You can deflate the financial cost of your vacation by assigning some expenses to different budgets.

For example, say you buy clothing on your trip. You can deduct that from your Clothing budget. Say you see a live show. That would come from your Entertainment budget.

Ultimately, a vacation is an experience — not easily measured in dollars and cents. (That’s not an invitation to spend recklessly, though.)

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