Skimp: luggage

Opt for a capsule wardrobe—filled with pieces that are easy to mix and match—and pack only the bare necessities. You can find a laundromat or buy almost anything you need at your destination. Budget travelling without a checked bag also means you have more time to explore instead of waiting for lost luggage!

Splurge: big ticket item

This is where personal preference comes into play. If you’re a hotel snob, you’ll want to pay for that instead of first-class airfare. Some travellers might want to stay in a luxurious hotel with amenities that might be out of their price point at home. Others might be happy crashing in a hostel and spend their money on a business class round-trip ticket.

Splurge: with your credit card

Use a credit card that doesn’t charge foreign transaction fees, and after your trip, apply any cash back to the credit card statement. However, it’s always a good idea to carry some local currency on you for small purchases from local vendors. Your bank will likely charge a small exchange rate. Likewise, you can also exchange your money for local currency at your destination.

Skimp: Hostels

If hotels seem cliché—or are just financially out of reach—travellers should opt for hostels. The prices can range from a few bucks a night, depending on the destination. Websites like HostelWorld can help travellers with planning and booking. To really cut down on costs, some backpackers might opt to camp on the hostel grounds rather than reserve a cot or bed inside.

Splurge: food

Splurging on food doesn’t necessarily mean spending a lot of money. Travellers should make an effort to taste the local cuisine, like Cape Malay food in South Africa, or delicacies like guinea pig in Peru. If you’re travelling to a destination where you might not trust the food, travellers should splurge on restaurants that cater to tourists. While those restaurants are likely to be more expensive, it may give you peace of mind—and a calmer stomach. Travellers should aim for an immersive dining experience, a splurge meal with a great view, and a meal that will be a good talking point when you return from your trip.

Splurge: bikes

Bike-sharing programs can be found in most major cities, and it’s a great way to get exercise on vacation. Most services offer a flat rate for the day, which will allow you to see as many places as possible.

Skimp: tourist traps

You’ll be hard-pressed to find a Parisian at the Eiffel Tower or a New Yorker in Times Square, even though seven million and 26 million tourists visit those locations, respectively, each year. Some tourist destinations won’t give you bang for your buck, especially in pricier cities. Pre-plan any sites that are popular or special to your itinerary. Once you arrive at your destination, locals can give you more authentic suggestions and help you skip tourist traps altogether.

Skimp: tour companies

As with tourist attractions, booking with tour companies can be pricier compared to booking similar amenities on your own. Travellers on a budget should inquire at their hostel or hotel about local tour guides to show them around a city. Many cities have free walking tours, where travellers are expected to give a small tip to their guides. If you feel it’s important to splurge on a tour company, ask a travel agent to find one based in the country you’re visiting. You’ll save a lot more money by working with locals.

Skimp: taxi service

Budget-conscious travellers should seek mass transit options to get around. Subways and trains in cities like Buenos Aires and Cape Town will cost about $1 per ride, while fares in cities like Washington, D.C., depend on the distance traveled. Public transportation allows travellers to get a glimpse of what it’s like to be a local. Especially in high-traveled areas like New York City, cabs can cost a lot and take longer to get you where you need to be. Overall, public transportation is the fastest and cheapest way to get around.

Reader’s Digest