Spending on Travel is Up: Helpful Ways to Tweak Your Household Budget for a Needed Vacation

May 9, 2022
Spending on Travel is Up: Helpful Ways to Tweak Your Household Budget for a Needed Vacation

Travel is up right now and is reaching its highest point since the before the pandemic. Airlines are reporting high demand, as are hotels and rental car companies. In spite of rising costs and labor shortages, the travel and tourism sector is rebounding to accommodate the growing demand. But even with an improving outlook for travel and tourism, American workers remain well-known for not taking all their earned vacation days. According to estimates, over half of American workers fail to take all the vacation days they’re owed, and, overall American workers leave a third of unused vacation time on the table. Unfortunately, affordability continues to be cited as the number one reason people don’t take vacations.

Setting up a budget for travel in 2022

Budgets are important but often underutilized tools for helping individuals and households meet financial obligations while simultaneously reducing expenses and saving for emergencies. While many people use budgets to track and regulate predictable monthly expenses, budgets can be goal-oriented, as well, helping people save funds in a short amount of time to use for a specific purpose. People who travel a lot know the value of budgeting, both before the trip and during it, so that vacations don’t end up creating stressful, overwhelming debt that cancels out the enjoyment.

Travel can be affordable with some simple tips for adapting the budget you already use to manage your expenses. Add a column for vacation savings, and begin planning:

Set a goal

Determine how much you can realistically save in a short amount of time. If you already have a destination in mind, research early on the flight and lodging costs of the region so that you can project your needed savings, as well as how long you will need to achieve that goal. Choose a savings goal that is comfortable and realistic so that you won’t give up.

Divert money from another household budget category

Analyze your monthly spending in your general household budget to find something to take from. Even small categories of spending, like music subscriptions or streaming services, can point you toward places to cut back and save. If there are small luxuries you can live without or reduce for the time being, like dining out, gourmet coffees, or brand name products, you can divert those expenses directly into your vacation savings column. They are already accounted for in your overall budget, so they will not add anything to your monthly output.

Set up a dedicated savings account

You are more likely to stick to your budget if you have a savings account. Your vacation account serves as a black-and-white reminder of how close you are getting to reaching your goal. Automating payments to your account by setting up automatic transfers prevents you from forgetting or neglecting your plan.

Put monthly payments on a credit card with travel bonuses

Your budget tells you how much you spend on housing, utilities, insurance, medical needs, and entertainment each month. Many of these expenses can be put on a credit card, preferably one that confers rewards. Credit cards that offer flight and hotel points can substantially reduce how much of your vacation budget must go toward just getting there and sleeping, and some of these cards offer a lot of points upfront just for signing up. Paying off each month’s bill in full ensures that you maximize the bonuses without adding debt.

Continue to pay down other debts

The point of budgeting your trip in advance is to prevent increases in your overall debt. Continue to pay down credit cards and other debts at the level you already are so that you don’t add interest that will ultimately negate your monthly savings. If you have high-interest debts, consider consolidating them at a lower interest rate and reduced monthly minimum.

Be flexible with dates

The more flexible you can be with the timing of your trip, the more options you will have with flight and lodging costs. Midweek travel deals are often available at reduced rates, as well as lower rates for just about everything if you can travel off-season. Early research is key for identifying the best times for a budget-friendly trip.

Adapting your household budget to include vacation savings does not need to be a daunting task, though it does require some financial discipline. People who travel a lot on small budgets are able to do so because they make travel a high priority in their lives and organize other nonessential spending around it. Planning ahead and adjusting the spending you already do every month will allow you to save money for your trip without increasing your debt.

While it can be tempting to forgo vacations because of high costs, taking time off is essential for reducing stress and burnout. A good budget is the first step in making travel a regular and affordable part of life.