Strategies for Staying Within Your Per Diem Budget When Traveling Abroad
Staying within your per diem budget when traveling is important for a number of reasons.
If you go over on your per diem, you can end up spending more than the company will be able to write off on their taxes—and that’s a problem.
It contributes to a less-desirable bottom line, and can severely overshoot your company’s travel budget.
But here’s the issue.
Per diem is something that needs to be considered on a case-by-case basis. The company probably has systems, policies, and procedures in place to help you avoid overshooting the budget—but as the person in the field, it’s crucial for you to understand how to make those policies work.
So here are some strategies to help you accomplish it.
1. Educate Yourself On Your Company’s Per Diem Policies
Understanding exactly what your company expects in terms of per diem is crucial.
For example—they probably have allowances set in place for specific things, and those allowances are probably set because they’ll help the company to regulate per diem spending in a wide swath of different circumstances.
So understanding the company policies, and taking them seriously, is pretty crucial.
2. Understand The Per Diem Laws Themselves
As an employee, you have per diem employee rights. And it’s crucial that you read up on them and understand them before embarking on your next business trip.
It’s not necessarily easy to figure out what does and doesn’t qualify for per diem. And it’s not easy to figure out what stuff actually qualifies.
But this is crucial for you to understand.
And this is sometimes the trickiest part—it’s also possible that your company’s per diem policy doesn’t cover everything that you should know.
It’s highly possible that when you read and understand the per diem laws in your own state, the company policies pertaining to it will make more sense.
3. Be Aware Of Your Spending
Per diem allowances are much easier to track when you’re keeping track of how much money you’re spending and of what exactly you’re spending it on.
The IRS allows so much in per diem spend per day—but if you go over that amount, the company won’t be able to write off those expenses.
Hence, where you get the problem of ‘breaking the per diem budget.’
So it’s crucial that you track your expenses, and that you don’t go over your company’s allowance (unless you’re authorized to do so).
The tricky thing about per diem budgeting is that your company probably relies on tax write-offs to afford the travel expenses. And if this gets jeopardized in any way, it can play havoc with the bottom line and make trips ultimately far more expensive than they were likely ever designed to be.
4. Save Your Receipts
Whether you’re saving physical receipts or keeping receipt records in some kind of digital third-party app, it’s crucial that you keep accurate records.
This is important for 2 reasons.
First, you need to keep track of the expenses so that you don’t go over budget.
And second, you need to keep a record of all expenditures so as to be able to provide your company with adequate documentation of what you’ve spent money on.
Without proper documentation, your company won’t qualify for per diem write-offs. And obviously, that’s a big problem.
5. Try To Plan Ahead
Planning ahead and understanding what you’re going to spend before you actually spend it can be incredibly useful for making sure that you don’t break your per diem budget.
For example—planning out hotel rooms, car rentals, meals, and entertainment in advance, and then setting aside ‘spending cash’ as is available for those types of activities in advance as well, can equip you with a strategy for only spending what you can actually afford.
And hey—that’s literally the definition of a budget!
If you follow these tips, you should be able to stay within your per diem budget without much difficulty.
The most important thing to understand is that it does take work.
But if you plan ahead, add up your expenses, and do a bit of careful planning, you should be able to use your per diem allowance to the fullest extent without breaking the budget.