In a recent post on Frugal Travel Guy, I highlighted my tips for using the best travel rewards credit cards as a companion to your travel budget. By planning ahead and budgeting for travel expenses that cannot be covered with rewards, I explained, you can stay true to your long-term financial goals while also enjoying the trips and adventures you really crave.

In that post, I also revealed that we spend around $10,000 per year on travel and travel expenses (gasp!), an idea that led to several condescending and rude emails from a handful of readers. If I used credit card rewards and still forked over $10,000 per year, they said, I was simply “doing it wrong.”

While I’m fairly good at ignoring uneducated and ridiculous comments, this really irked me for some reason. That’s probably because I think far too many people who use credit card rewards to travel the globe are completely dishonest about how they spend their money.

Ask a room full of people who use airline miles and hotel points to travel and at least a handful will tell you they hardly spend a dime. It’s all free, they’ll say, as they rattle on about their last trip or the one coming up.

But, is that true? I sincerely doubt it.

Sure, a handful of people might manufacture so much spending that they earn enough cash back to cover each component of their trip, but new rules meant to limit manufactured spending have made that hill a much tougher climb. And even those who manufacture spending to earn more points and miles are spending hours on this hobby each week, plus gas and wear and tear on their cars to buy gift cards and liquidate them into money orders or whatnot. The reality is, most people in this hobby are spending a whole lotta cash on travel whether they admit it or not.

I just choose to be real about it.

How (and Why) I Budget for Travel

I love credit card rewards as much as anyone else in this hobby, but I also love to travel and do things my own way. Even more than that, I love to reach all of our financial goals every year. Simply put, I wouldn’t spend so much on travel if we weren’t a) maxing out our retirement accounts and investing heavily, b) investing in real estate, c) saving for our children’s college education, d) saving cash for emergencies, and e) earning a bunch of money to begin with.

Life is short, and living for today is a goal we both strive for. But the fact that my husband spent a decade in the funeral industry taught me a lot about saving for the future, too. I would not feel comfortable traveling or spending money on it unless I had all my financial ducks in a row first, here are some great tips on saving money.

As a result, I take our finances seriously – extremely seriously. At the beginning of each month, my husband and I sit down and create a zero-sum budget. In it, we include all of our regular monthly bills, estimated bills like utilities, groceries, and gas, and anything else that we know will come up that month. We also include an estimated budget for any trip components we need to purchase or any travel plans we have that month. That way, I’m being real with my expenses, budgeting for them, and making sure we can afford our travels without standing in the way of our own financial goals.

And, isn’t that the way it should be? Doesn’t it make sense to plan ahead when you know you’ll spend some cash? I certainly think so. In fact, I actually think that’s the only way to benefit from travel rewards without really screwing yourself over the long haul.

What Do I Spend All That Money On?

Airline miles, hotel points, and flexible rewards pay for the bulk of our trips, but they can’t possibly cover everything. That’s why, even though it hurts, I like to be realistic about what we’ll spend and list it right alongside our other bills. $10,000 is a lot of money, but I would estimate we used at least $40,000 in travel within the last twelve months (most of which was paid for with rewards). Still, outside of hotels, flights, and a few other expenses we can pay for with points, nothing is free.

Who wants to travel to London without getting the London Pass and seeing Windsor Castle, Henry VIII’s Hampton Court, and the Tower of London? Who wants to visit the beat-up streets of Rome without sitting down for a stone-fired pizza, an Aperol Spritz, or a boozy brunch with some new friends?

Who wants to land in Greece without taking a boat ride to one of its eclectic and famous islands? Or to go without mouth-watering Souvlaki from a street side stand? Who wants to see Paris without sitting at a sidewalk cafe for a poorly flavored espresso? Or miss out on the acres of world famous art nestled inside the Louvre?

And, what about airline taxes and fees, airport meals? Credit cards that charge an annual fee? Cab rides and taxi rides? Train fares? Tips? Meals?

Budgeting for all of these expenses is not just smart, it’s the best way to plan ahead. Who wants to want to leave on an epic vacation somewhere awesome, then return home to a giant credit card bill? Probably no one reading this wants anything of the sort, which is why we should all strive to be as realistic as possible and, most importantly, plan ahead.

The Bottom Line

If you’re thinking of pursuing credit card rewards, try to be realistic about the many costs that can’t normally be paid with points and miles. While there’s certainly nothing wrong with forking over the cash to enjoy the trip of a lifetime, you may not be doing yourself any favors if you don’t consider those costs in the context of your short-term and long-term financial goals.

Nothing in this world is free. Sadly, that includes the use of points and miles. But, trust me when I say that rewards-fueled travel is a lot more fun when you have the money in the bank before you go.

Does using travel rewards cost you money? How much do you spend on an average vacation?