How to Budget for Trips: When to Book and How to Avoid Hidden Fees

Sally, it was so good to see you over the weekend. This is why I love Find My Friends.
Okay, I'm glad you said that you love Find My Friends because when I saw you on Find My Friends at Disneyland and I happened to be in Orange County this weekend, I was like, do I hit you up? Should I tell you that I'm here? Should we meet up? Yes, of course, always. I love when our little bubbles just like end up in the same place.
Like this is why I love travel. And of course, you live so far away from me, but it is fate that we both happen to be at Disneyland at the same time.
Of course, the listeners know that we love Disney, so maybe it's not completely surprising. And we did it the budget-friendly way.
We met up in the free zone at a Disney hotel. Do you want to tell people how much you spent on our little meetup? Yes, that's right.
I was just at Downtown Disney for a little bit of time, so I got to see you for just the low cost of $10 parking,

which gets you four hours. We were able to go hang out at the Grand Californian Hotel Lobby, which we love.
And I ended up getting to go walk around and see all the shops. But most importantly, I got to see you.
Yes, it was so fun. If you are planning any travel this year, and you're putting together a travel budget, we've got tips for you.
Welcome to Smart Travel, a deep dive into the tips, tools, and tactics to maximize your travel dollars. I'm Sally French.
And I'm Megan Coyle. And we are the Travel Nerds, ready to help you plan your next big trip.
Today, we're talking about how we budget for trips. But first, the news.
And just a heads up, in this episode, we'll talk about a few credit card companies that are NerdWallet partners, but that doesn't influence how we discuss them.

All right, let's dive in. Okay, so I know you and I got to spend the weekend in sunny Southern

California, but many people are facing extremely cold temperatures out there in what feels like

this never-ending winter. But I am still not stopping thinking about spring break.
AAA sent

me over some interesting booking data that's made it pretty clear if you are going away on spring

Thank you. winter.
But I am still not stopping thinking about spring break. AAA sent me over some interesting booking data that's made it pretty clear if you are going away on spring break this year, you should pad your budget.
The big thing with spring break travel is airfares. And in fact, roundtrip airfares to popular domestic cities are averaging 7% more than last year.
Domestic hotels are up 8% more than last year. Well, then I'm glad our main segment today is all about budgeting at least.
Look at us on top of it. They also gave you some data on the top 10 destinations where people are going for spring break.
Where are they going, Sally? Okay, I'll give you this list rapid fire. We have Orlando, Fort Lauderdale, Atlanta, Miami, New York, Honolulu, Anaheim, where we just were, Tampa, another Florida in there, and Chicago, and finally, Charlotte.
Lots of great Florida representation on there and a little SoCal. Love it.
Lots of Disneyland trips for more people than just us on the horizon. Also, we have some interesting cruise data from AAA.
According to AAA's cruise forecast projections, a record 19 million Americans are going on ocean cruises this year. That's the third year in a row that cruise passenger volume has hit a new record.
That's not surprising to me at all. Ever since the pandemic ended, cruises have been super, super popular.
And actually, I am going to check out a couple cruises for myself this spring break. Both MSC and Norwegian Cruise Line have new ships debuting this spring, so I will be there checking them out.
Awesome. You'll have to report back.
Speaking of checking out new things in travel, last week I went to the new Capital One Lounge opening at the Las Vegas airport. That's right.
You also flew to Las Vegas. How was it? It was so great.
Vegas is such a popular destination for both vacationers and business travelers, so it was really smart to put a lounge there where people can sort of recharge after a week or weekend of revelry or work. That's also tiring.
Capital One Venture X cardholders get unlimited access for themselves and two guests to these Capital One lounges. So it's also much easier to bring companions or your family or your work friends with you there than it is at the nearby American Express Lounge at the Las Vegas Airport.
Although, do you think that generous guest policy means it's going to be super crowded? Yeah, I'm a little scared, to be honest. The good news is that the Capital One Lounge is pretty big.
There's room for about 135 guests. So it's a tad smaller than the Amex one at the Las Vegas Airport.
But honestly, a lot to like in there. I think the food at Capital One Lounge is the best among the credit card issuer lounges.
They serve all these like small plates. It's sort of like tapa style and it's all you can eat.
So you can try a little bit of everything. I had caviar deviled eggs, salmon, avocado toast, short ribs, strawberry pop tarts.
Honestly, I had so much I can't even list it all. That sounds so good.
And then I know that people love Capital One lounges because of their to-go food offerings. Yeah.
So this one has that too. They have this like big grab and go section at the front of the lounge and you've got a refrigerator full of sandwiches, bowls, salads.
There's pastries out on the counter, drinks. You can make your own snack mix.
So they know people are going to take food for their flight and they make it super convenient. Okay.
I'm going to have to go check it out. Now, if everyone wants to read your review, I think we'll put a link to the show notes.
I want to see your photos so they can see them online there. And while you're at it, our colleague, Benjamin Din, also covered another lounge opening last week.
He went to the new Chase Sapphire Lounge in Philadelphia. I edited that story and the pictures will also convince you that it's worth a visit.
The only caveat being that it's a little far for American Airlines flyers flying into Philly. Although you are an American Airlines flyer.
I know. So I might have to make the trek over there because this Chase Lounge has so many amenities.
Like they have this room where you can get free facials. There's a kids playroom, an arcade, and this one even has a beer garden.
So if you're looking for entertainment, this Chase Lounge can keep you entertained for a few hours. And you know, these Chase Sapphire lounges are totally awesome.
I just saw one in Phoenix. If you go to the NerdWallet website, you can see reviews of all these new Chase Sapphire lounges.
I think they're some of the best in business. Not to mention you can figure out which cards will get you in there.
That's important. Yes, that is important.
Okay, last news item for the day. Uber is making a change to the app when you use Uber abroad.
And it's not good for travelers who are not paying attention to currency conversion fees. That's because when you are using Uber in another country, Uber will start showing your prices in your home currency by default.
So for example, if you're in Italy, instead of showing you Uber's prices in euros, it's going to start showing you those prices in US dollars. This goes into effect on February 27th, but it is possible to actually avoid this fee if you turn off that preferred currency setting in the Uber app.
So if you have a credit card that charges no foreign transaction fees, and of course, NerdWallet has a list of those credit cards, go back to nerdwallet.com or in the show notes to find those. You won't pay any type of currency conversion fee when you use your credit card, but you need to make sure that you are paying in the currency of the country that you're using Uber in.
We'll have more details about that on the NerdWallet website, as well as which cards get you more rewards on Uber rides. Just another example of one of these annoying fees that continuously comes up in travel.
Of course, I'm so glad you're listening to this show so you can

learn how to avoid those types of fees. Also learn how to better budget for travel.
That's the topic coming up right after this break. Okay, so Sally, it's the beginning of the year-ish, so I feel like we have almost the whole year ahead to plan trips and figure out how to pay for it.
Year-ish indeed. And yes, figuring out how to pay for trips can be the trickiest part, so it's good that we're here starting early.
So for this week's main segment, we're

going to go over some of the ways we budget for travel, whether that's saving cash, using miles,

or just finding deals. And you'll find out it can be as low maintenance or high maintenance as you

want it to be. Wait, I hope you're not saying that I'm high maintenance.
Well, definitely not

with travel. And honestly, it's not a bad thing to be high maintenance with your money management.

If it helps you keep track, do it. Thank you.
I love the validation. So let's start by

Thank you. I love the validation.
So let's start by talking about what sorts of plans people should make in terms of their money. For many people, that's having a dedicated fund just to pay for their travel.
It's kind of like having that piggy bank as a kid where you put coins in a jar to save for a certain toy, except the adult version is just a separate account at your bank. When I was a kid, my piggy bank actually was not a literal pig.
Instead, it was this little island figurine and you put the coins inside of the sand. You were already saving for vacation that young.
I love it. I think it was destiny that I was supposed to host this podcast.
Okay. So for this episode, we're talking about putting away a certain amount of money into a separate account or just a portion part of your regular savings account.
You don't actually need to have a full separate account, but just a portion piece to fund the trip. So I'm curious, do you do anything like this, Megan? Sort of.
So I really prioritize travel in my life. So for me, it's a non-negotiable.
I've always gone home for the holidays, usually both Thanksgiving and Christmas. So, you know, as much as you can try to find a deal for those, the holidays are an expensive time to fly and I've got to save for it.
You know, that's actually why I avoid traveling during the holidays. Yeah.
Like my family has been doing this turkey trot, which is this race on Thanksgiving day for 20 years. So I can't miss it.
I need to be there. Oh, actually, you know, I do love a good turkey trot.
Okay. So nevermind.
I endorse this. You do have to be there for the holiday travel for the turkey trot.
Yeah. So whenever I fly home for the holidays, in my mind, I set a budget for that.
So it's about $500 round trip going from the West Coast to the East Coast back for Thanksgiving and Christmas. So I'm paying about a thousand bucks for holiday flights every year.
Oh man, a thousand dollars. So are you paying cash or are you seeing points at all for this? Sometimes, but first let's stick with the cash.
So I like to use the beginning of the year to plan out my trips for the whole year ahead. Since holidays are non-negotiable, right there I know I need to budget roughly $1,000 for that travel.
And if I find a great points deal, I'll book it on points, but I always want to make sure I have the cash just in case I'm not able to find anything. Of course, airfares can be unpredictable.
So using last year's travel costs is a good indicator, but I always recommend baking in some flexibility. In fact, I was actually just looking at airfare prices and NerdWallet analyzes airfares every month and found that airfares on average in December 2024 were up 8% versus December 2023.
So I do like, Megan, that you are sort of saying you budget roughly $1,000, but it's important that we know maybe next year you might need to budget closer to $1,100 to account for that airfare inflation. For sure.
And airfares don't go up every year, but this year they did. So it is not unreasonable to expect a bump next year too.
And the thing about my budget is I set this budget for holiday travel, and that means like sometimes I have to make accommodations to come in under budget. Like maybe I'll take a red eye or do a flight with a layover this year if that ends up being cheaper and keeps me within my budget.
Oof. Sometimes you have to do that red eye for East Coast flights no matter what.
But even if air bears don't go up, I think the good kind of silver lining here is that you have some money left over so you can save it or maybe use it for something else. You don't have to do that red eye or you put it towards a nice family dinner.
Okay, so we talked about holiday travel. Megan, what are your other flights for the year? So right now I'm thinking about the travel for all those weddings I have to go to this year, and I'm going to kind of estimate a rough budget for those as well.
And I think you said you had something like four destinations or something this year. Oh my gosh.
Yeah. Four and two are in Italy.
So how do you get an estimate of how much those flights are going to cost? So I basically just go on Google Flights or any kind of travel aggregator and start looking at what the average prices are. There's some really great tools on Google Flights, for example, where they have this little graph that's like, this price is within the normal or it went up recently in the past few days.
So it can give you a really good idea of what the average airfare is. And then also, we've talked about this before, but setting a price alert.
So I will set that price alert really early in the year and be able to watch it come through my emails and say, okay, I've seen the prices for the past few months and this is the price I'm comfortable setting for the budget. Yes.
So I love the idea of airfare alerts and this can be really helpful, especially in finding those last minute deals, sometimes even deals booked really far in advance. Generally speaking though, NerdWallet recommends what we kind of call a Goldilocks booking zone.
This is that sweet spot, not too early, not too late. Typically for domestic flights, that's one to three months in advance.
For international flights, that's generally about two to eight months in advance. Yeah.
And you can see all the data behind that on NerdWallet's website. We'll put it in the show notes, but listeners, you can find the article about the best days to book a flight and when to fly.
We talked about all your flights. You have to book all this holiday travel, all these wedding flights to Italy flights.
So how are you actually saving money for all of this? Okay. So I have a side hustle and it involves podcasting, funny enough.
So any income that I make from that, I put that into a separate bank account. You know, you and me both love the side hustle.
Oh yeah, we've been on the side hustle life for years. And I don't recommend getting a side hustle just to fund your wanderlust, but it's been a great way for me to budget for travel separately.
The money from those gigs for me goes straight into this high yield savings account. So that account also earns a bit of interest and I just save all that money and feel very comfortable spending it on travel when I want to.
I love that you bring up high yield savings accounts. If you are curious about learning more what these actually are, we have some great articles about that on NerdWallet.
We won't go into that too deep here. I know our buddy Sean has talked about them quite a bit on our sibling podcast, Smart Money, shameless plug over for there.
At least for now, we'll link those resources in the show notes. But for the listeners out there who have just one job, which I think is most people, what do you recommend? Well, a lot of people don't realize that most employers that use direct deposit allow you to direct your income into different bank accounts if you want.
So you can go to your payroll team and you can say something like, I want 90% of my income to go into this account and 10% to go into this other account, which could be for travel or any kinds of fun things you're saving for. Yeah, it's super simple.
Yes. And this is usually just a few clicks.
Typically, something in your payroll system will make this pretty easy. Yeah.
And if you don't have like an online system, just ask your HR team. They can definitely get this done for you.
Sometimes you have this funky payroll system. It's done in a way that you can't actually split your direct deposits.
Of course, you can always just set up an automatic transfer from your bank account to shift some of that income into a separate actual vacation fund bank account. Either way, just automate it so you don't have to think about it.
For example, if you have a travel credit card, you could set up auto pay so that you could pay off that credit card directly from your travel account. It just makes it so much easier to budget correctly when you're not moving money around all the time.
AutoPay definitely is a great tip. NerdWallet generally does recommend getting AutoPay set up.
And we will talk more about why we recommend that, why we also recommend using travel credit cards in a later episode. Generally speaking, though, if you are not able to pay off your travel credit card in full every month, it might be something to avoid just because any sort of late fees or interest on your credit card won't be worth the level of rewards you're actually getting.
We will dive into that later, though. Exactly.
These travel rewards are only valuable if you can pay off your credit card every month. But again, we'll talk about it more in another episode.
Look forward to that. So we did kind of allude to this earlier, but in terms of actually estimating the cost of your flight, how accurate do you feel like you usually get? I think I'm pretty close.
I am actually terrified of overspending. So I remember in college, like I had worked in high school and I'd worked two jobs all the way through college, but it was so expensive to pay for all those textbooks and the food and the flights home.
It was just like scary to see all of your savings dwindle. So because of that experience, I definitely overestimate for how much I'll need.
Cool, cool, cool. I think that's a good tip.
Overestimate. Worst case scenario, you have some extra savings in your travel fund.
Totally. And if you end up having to pay for something unexpected, like something goes wrong and you have to book a different shuttle or something like that, your travel budget will have room for that if you have extra.
Ooh, yes. Those unexpected travel expenses.
I actually think that should be a topic for a future show. Oh yeah, definitely.
We could talk forever about that. Okay, cool.
So we talked about budgeting for flights. Now I imagine you budget for rental cars and hotels the same exact way.
Of course. And sometimes I can avoid those expenses if I'm staying with family or I'm in a walkable city maybe where you don't need a rental car.
But yes, I'll roughly go through and budget the same way I do for flights and hotels. And we have mentioned Google Flights so many times.
I also love Google Hotels, which if we're looking to budget for our hotel costs, it largely operates the same way. Yeah.
And we have some awesome data too about rental cars, which can help you budget for that. We did a big rental car analysis last summer and we found out that rental cars tend to cost about 13% more when booked three months in advance versus just seven days in advance.
I remember pulling that data. I was actually super surprised to see that because everyone wants to know about last minute rental car deals.
Yeah, it's good to know that there are some last minute deals you can get, and rental cars just happens to be one of them. Let's talk points and miles because this is the part you've been waiting for, Sally.
Yes. Now, these are fun.
So often in the financial space here at NerdWallet, everyone is like, save, save, save. And yes, that's true.
But with points, we generally say the opposite. Unless you are saving for a highly specific redemption, like, you know, the 200,000 points to go on first class, I'm usually just spending my points because otherwise points devalue.
Totally. And we've seen a few cases of this already happening this year.
Marriott raised award prices of some high-end properties at the end of January. If you were just waiting to book one of those Marriott's on points, it's suddenly going to cost thousands of points more per night than you thought.
Yes. And generally, if Merit's raising award prices, you can guess all the other hotel brands will too, which is why, yes, I do like the idea of having some future trips in mind when you're coming up with your travel reward strategy.
If you are saving them, have that specific redemption, but don't just sit on that huge stash for years only to never use it. Totally.
And, you know, like let's use my Australia trip this year. This is another one of those weddings I'm going to.
So many weddings. Yes.
There are a few flight options between Los Angeles where I live and Sydney where the wedding is. And so at the beginning of this year, I'm starting to already figure out like how am I going to collect enough points to be able to pay for maybe an award flight to Australia.
And I'm going to keep my options open. You know, maybe I'll fly into Brisbane, which is another city in Australia.
It's closer to the wedding, but has less direct flights from here. So maybe I'll do that.
Maybe I'll do a little side quest and visit New Zealand, which is like one of my favorite places in the world. I studied abroad there.
So taking the time early in the year to plan like, okay, where am I going to go? How am I going to collect the points to be able to do these flights? That's a big part of travel planning. Yeah.
And you know, it's funny you bring up this idea of a side quest to New Zealand. Often when you're booking trips, you can almost get two trips for the price of one or two trips for less than the price of one simply by booking a flight somewhere near where you actually need to go and then taking a short hop flight to your actual destination.
With this, flexibility is totally the key here. So NerdWallet always recommends a strategy of at least just getting yourself somewhere close to where you need to book.
So you and Megan, your case is maybe New Zealand is kind of close-ish to Australia. And then booking a shorter, cheaper flight to get to your actual destination.
We see this a lot when people want to go to Europe. NerdWallet recommends just get somewhere in Europe and then you can take a shorter flight.
Even Europe's got a great train network to get to the actual city you're trying to go to. Yeah, it's awesome.
So then once you've figured out like maybe the routes you want, that's when I would start to do a little bit of research on which airlines have the best award rates going there. Like you just mentioned Europe.
There are certain airlines that come to mind that I know the rates to Europe are really cheap. And so once I figure out which airlines have some of the best award rates to that region, then I ask myself, can I book it with miles? I already have.
And this is also interesting that some people might not have, let's say, miles in some obscure European airline, but you might have a travel credit card where you can transfer your credit card points to one of those airlines. NerdWallet really does recommend earning transferable points, and you can find which credit cards earn those and a list of each credit card's program transfer partners on the NerdWallet website.
And another thing to think about if you're thinking about credit cards, are there any credit card sign-up bonuses that might be able to cover the price of this award flight? So once I know what kind of miles or credit card points I might need, then I can watch throughout the year to see if one of those cards that earns that type of reward has a limited time sign-up offer that's even better than the usual offer. Totally.
And that's why it's so good we're talking about travel now is you don't want to just wait to get that credit card right before you want to go on a trip. Often it's better to wait for the company to announce an offer period with a bigger intro bonus.
And of course you want to bake in time because you need to apply for the card. Then you need to meet a minimum spending requirement to even get that sign-it bonus.
Yeah, it's like a multi-month strategy, but it really can save you so much money. And if it sounds like a lot of work to you, I got you.
I wrote this article on NerdWallet that lists all of the credit card limited time offers available right now. And this stuff changes constantly.
So I'm always adding these new deals and making sure everything on that page is up to date. We'll link to it in the show notes.
Generally speaking, we recommend giving yourself at least six months before the trip if you're going to apply for a new card and you intend to use some of the rewards from the sign-up bonus to book. And we haven't even talked about those actual benefits on the travel card that also might help you save money on the trip.
Yes, I want to talk about those. So for example, I have the Hilton Honors American Express Aspire card.
That card comes with a free night reward in your first year of card membership and every year upon card renewal. Often, I plan my trips purely just around that one particular benefit.
So do you usually find a place to use the free night and then make a trip out of it? Or do you have some trips in mind and then you try to find out where you can redeem that free night? Yeah, you know, it really depends. If I have to go to my two weddings in Italy, I might just spend it on one of those nights in Italy.
But,

you know, for me, I actually did this trip to Mexico last year. It was my first time actually

going to Mexico, believe it or not. And to go there, I basically just looked at which hotel

in the Hilton portfolio was the most expensive because, you know, I want to maximize the value

of my certificate. That also converged with just what was a cheap flight from San Francisco.

I ended up at the Conrad Punto de Mita, which is just outside Puerto Vallarta.

Oh, yeah. I saw your pictures from that.
It looks so gorgeous.

Yeah. You know, I'm really not a fancy hotel person.
And obviously, this was a super fancy

hotel. In fact, cash rates that night were close to a thousand bucks.
I would definitely not pay that kind of money in cash for any hotel anywhere, but if the credit card benefit is covering it, then I'm not going to complain. Super nice.
And free nights are a really good example of using your credit card perks to help keep the cost down of your trips. Don't you also have the Southwest Companion Pass? Yes.
You know I love the Southwest Companion Pass. So we did a segment

on this on the Smart Money Podcast. We won't go into it too much here.
You can just listen to

that episode. Another shameless plug.
Just to give everyone a quick recap, if you earn 135,000

qualifying rapid rewards points through taking flights or earning points on Southwest credit

cards or spending with partners, then you get this pass that lets you take a companion for just the

Thank you. qualifying rapid rewards points through taking flights or earning points on Southwest credit cards or spending with partners, then you get this pass that lets you take a companion for just the cost of taxes and fees, which is typically $5.60 if you're flying domestically.
Yes. And you'll get to take your companion for that price on every flight you take for at least a year because the pass is good for the year you earn it and the entire next calendar year.
So again, you only just have to pay the taxes and fees for the companion when they come with you on a flight. Yeah.
You know, last year I went on 10 flights with my fiance and we estimate that saved us about $1,600. Wow.
Okay. Super good deal then.
Yeah. And in fact, I know people who use it way more than we do.
Of course, the more you fly Southwest, the more value you get out of it. And I believe you also have a semi-related hot take.
You know, I've been thinking, what do you think of naming this segment Hot Takeoff? I love it. Yes.
Okay, share your hot take of the week. Okay, hot takeoff.
Let's go. Okay, so this one really is definitely going to get a lot of hate.
But my hot take, or shall we say hot take off, is that I actually don't hate the middle seat. Oh my God.
That is steaming hot. Just tell me why.
I'm not going to be convinced, but go ahead. Please let me explain myself.
Okay. So first off, listeners should know I'm pretty small.
I'm four foot 10 and I have a pretty tiny frame. So for starters, I do not find the middle seat as squishy as many other people might.
But okay, here's the real win. Many airlines actually do give you more under seat space for your bag if you're in the middle seat versus others.
And you know, I'm all about carry-on only, so I appreciate more space for my carry-on. Yeah.
And guys, she's not just carry-on only. She's like backpack only, like only something that goes under the seat in front of hers.
Yes. Well, and backpack only is because I'm so short, I can't reach you overhead bins anyway.
Okay. I feel that.
I feel that. I'm also pretty short.
Okay. And then there's another reason why you like the middle seat.
Right. Okay.
So this is that the middle seat is genuinely better than the window because there's only one person you have to bother to get up and use the bathroom. Okay, but that's still one person and it's honestly probably me because I need the aisle.
I hate bothering even one person. Okay, yes.
Okay, well, so here's the real part where people start throwing tomatoes at me. My real hot take is that if you don't have to get up and go to the bathroom at least once during a flight, unless it's like a 45-minute flight, you are not hydrated enough.
Oh gosh, you are literally that person. Okay, I cannot say you've convinced me.
Let's just wrap this thing up. Okay, okay.
TLDR is that first off, use tools like Google Flights to get a rough estimate of your travel costs. Make a separate travel fund to budget for your trips.
This can make it easier to stay on track. And of course, always leave wiggle room for those unexpected expenses.
And of course, you do not necessarily need to pay cash. There are bunches of ways to save money using credit card benefits and travel rewards.
And since you've already set aside money for travel, you can put any extra into your next trip. And listeners, do you have any questions? Send them to us.
Email us at travel at nerdwallet.com or, you know, for extra credit, email us a voice memo. You might even hear your voice on the show.
I want to know what you think about either my middle seat hot take or any other aspect of what we talked about by leaving a review or sending us an email with feedback for the show. And if you're not already doing it, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeart Radio to automatically download new episodes.

This episode was produced by Hilary Georgie and Tess Vigeland.

Claire Soce helped with fact-checking.

And a big thank you to NerdWallet's editors for all their help.

And here's our brief disclaimer.

We are not financial or investment advisors.

This info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Thanks for listening.

We hope you're inspired to keep your passport full and your wallet even fuller.

See you next episode.