Why a Budget Comes Before the Booking
Welcome back! Last time we chose where and when to go. Now for the part a lot of people skip: working out what the trip will really cost.
Have you ever come home and found the bank balance lower than you expected? Most of us have. It's rarely one big mistake. It's lots of small costs you never planned for.
Think of a budget as a map for your money. Without one you can still get somewhere, but you'll probably take a few expensive wrong turns.
We'll build a budget for a worked example: you and a friend, four nights in Lisbon in the shoulder season, splitting costs. All the pound figures are example estimates to show the method. Your own numbers will be different, and that's fine.
Step 1: Split the Trip into Categories
Why split it up at all? Because "about £600" is a guess. Separate categories turn that guess into a plan you can check.
We'll use five:
- Getting there and back: flights or trains, plus bags.
- A place to stay: your share of the room.
- Daily spending: food, drinks and local transport.
- Activities: museums, tours, day trips.
- Hidden extras and a buffer: the costs that catch people out.
For Lisbon, let's pencil in £150 each for return travel. In Level 3 we'll look at how to find good-value flights, so for now this is just a placeholder.
Next comes the room. Say a double costs £70 a night. Over four nights that's £280, so £140 each.
Step 2: Estimate a Daily Spend
Here's a handy trick. Instead of guessing a total for food and fun, work out what a typical day costs, then multiply.
So what does a normal Lisbon day look like for you? Maybe a pastry and coffee for breakfast, a cheap lunch, a sit-down dinner and a few metro or tram rides. We'll call that £40 for food and local transport. Add £15 for activities, say a museum or a viewpoint, and you get £55 a day.
Now, quick question. Four nights means how many days of spending? It's five, because you'll eat and get about on the day you arrive and the day you leave. People often multiply by nights and come up short.
So it's 5 × £55 = £275.
Not sure what a typical day costs where you're going? Look at menu prices in recent reviews, local transport fare pages, and the ticket prices on attraction websites. Ten minutes of research beats a wild guess.
Step 3: Hunt Down the Hidden Costs
This is where budgets usually leak. Let's go through the usual suspects.
Tourist taxes. Lots of cities add a nightly charge per person on top of the room price. In Lisbon it's €4 per person per night for guests aged 13 and over, up to a maximum of seven nights. For our four nights that's €16 each, roughly £14. It may be taken when you book, at check-in or at check-out, so check your booking. And it isn't only abroad: since 24 July 2026, Edinburgh has added a 5% visitor levy to accommodation, charged on up to five nights in a row. Barcelona put its charges up in April 2026 too. Rules like these change, so always check the latest for your city.
Getting to and from airports. Everyone remembers the flight. Hardly anyone budgets for the train to Gatwick or a week of airport parking. Let's allow £30 for that. At the Lisbon end, the metro runs from the airport into the city for about €2 plus a small one-off card fee, which our daily transport money already covers. A taxi would cost far more.
The little things. Think about toiletries you buy because you packed light, a phone charger you forgot, tips, and paid toilets. Each one is small, but they add up.
And don't forget travel insurance. It's a real cost that belongs in every budget. We'll look at it properly in a later level.
Step 4: Add a Buffer for Surprises
Let's add it up: £150 + £140 + £275 + £14 + £30 = £609.
Are we done? Not quite. Things go wrong. A rainy day sends you to a pricier indoor attraction, or a bus strike means a taxi. That's why you add a contingency buffer.
A common rule of thumb is 10–15% of your total. For us, about £75 works nicely. That brings the realistic budget to roughly £685 each.
Think of the buffer as an umbrella. You hope you won't need it, but you're glad it's there. And if you come home without touching it? Lovely. That's money towards the next trip.
Step 5: Track Planned Against Actual
A budget only helps if you check it. All you need is a simple sheet, either a spreadsheet or a notes app, with four columns:
| Category | Planned | Actual | Difference |
|---|---|---|---|
| Daily spending | £275 | ||
| Activities | (inside daily) | ||
| Hidden extras | £44 |
Each evening, take two minutes to note what you spent. The Difference column tells you straight away whether you're over or under.
Say you're £20 over by day two. No panic. You can have a picnic lunch tomorrow, or let the buffer cover it. The point is that you know, and you can choose.
After the trip, look back at the sheet. Was food dearer than you thought? Was the buffer too big? Next time, your estimates will be sharper.
Key Takeaways
- Split your budget into categories: getting there, a place to stay, daily spending, activities, and hidden extras plus a buffer.
- Estimate a typical day's spend and multiply by the number of days, not nights.
- Watch for hidden costs: tourist taxes, getting to and from airports, small extras and insurance.
- Add a 10–15% buffer for surprises.
- Track planned against actual spending each day in a simple sheet, and use what you learn next time.