How Much to spend on vacation - Ep #70
Welcome to episode 70 of the One for the Money podcast. I am so very grateful you have taken the time to listen. In this episode, I answer the question “How much should one spend on vacation?”
In the tips, tricks, and strategies portion, I will share some cost-saving travel tips.
In This Episode
How Much Should You Spend [3:15]
Why You Should Travel [6:21]
Travel Saving Tips [8:56]
MAIN
When it comes to travel, St Augustine and Mark Twain said it best in my opinion.
St Augustine said that -The world is a book and those who do not travel only read one page.
And Mark Twain said - Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime.
My family and I are enamored with travel because of what we learn about the world, other cultures, and about ourselves. There are few things that create better memories than a vacation. Some have argued that life is really about collecting wonderful memories and research has shown that people tend to be happier when they have purchased experiences rather than things.
That certainly is the case with our family. When both my children and my business were young, we traveled by car around the Western United States and Western Canada. We love the outdoors and visited over 25 national parks in both the US and Canada with Banff, Jasper, Waterton, Glacier, Yosemite, and Crater Lake being some of our favorites but there were so many others that were really great as well.
As my business and kids grew we have been fortunate to be able to take a few international trips with Moorea and Cinque Terre being some of our favorites.
When our family talks about our favorite memories it almost always involves experiences we’ve had together on our trips and our favorite family photos have come from our trips as well.
This is why I am a strong advocate of traveling. It doesn’t have to require an airplane, because seeing a local museum or park can also provide a memorable time.
In fact, when I was a kid our family never took an airplane on our trips. Instead, we all piled in our wood-paneled station wagon with the rear-facing seats in the back and went to the national park near our home, and a couple of times we visited family that lived in the Western States of Utah, California, and Texas. It was an incredibly long drive from Alberta, Canada but I have some cherished memories from those trips.
One question that many ask is how much should one spend on travel. Some financial experts recommend that you spend 5-10% of your net income per year on vacations.
For example, if your net income is $100k a year, and as a reminder that is your income after taxes and retirement contributions. then you could reasonably spend $5-10k a year on vacations.
My family and I tend to spend more than 10% but we restrict our expenses in other areas of spending to compensate. We only eat out rarely and if we do it’s usually inn-n-out. Our kids don’t participate in club sports and just play AYSO soccer instead. With savings in those areas, we are able to do more on our vacations.
When it comes to money for vacation it should be saved in advance of the year of travel and would be in addition to what you have in your emergency savings.
I recommend you tentatively plan your upcoming trips for the coming years so you can anticipate the expenses. We have already planned our travel destinations for the next 2-3 years. I’ll do research on the expected expenses and create a Google spreadsheet that forecasts potential transportation, accommodations, food, activity, and other related expenses. As the trip gets closer, I even break it down by a daily expense. We usually save money on our trips by only eating out one meal a day and it’s usually a one to two-dollar sign place we find on Tripadvisor or like website. We also frequent the grocery stores of the country which is an enriching cultural experience to shop with and amongst the locals.
For those who like to eat out more or at nicer restaurants, you can forecast those anticipated expenses beforehand. I always add a few extra thousand dollars to our overall travel budget just in case we have some unexpected trip expenses.
Regarding travel, you will also want to consider the season of life you’re in. If you’ve got little kids, you will likely want to spend less of your income on vacations and do lower-key, closer-to-home trips. That’s what we did with our road trips to National parks. So many great memories from these. However, my wife and I have many more memories than our kids because they were so young they don’t remember them as well, but they do look at the photos as they play on our TV. Now that our two oldest kids are older we have justified spending more than the 10% of our net income on vacations. That was the rationale used for our recent trip to Europe. When my wife would ask about planning the trip, I’d tell her that we have 2 reasons why we should go on it, and that number represented the number of summers we have left with our oldest son Lucas before he leaves the nest.
Now as wonderfully amazing as trips are one should never, ever, go into debt to go on a vacation. Instead, visit a local national or state park instead. Often the memories are just as good.
I was reading an article on travel spending and they had a very appropriate warning which was beware of luxury creep. They said “Remember that it’s much easier to go up in the luxury level of a vacation than it is to come back down. That is, right now, you feel a 2-star hotel is perfectly amenable. However, once you stay at a 4-star property, a 2-star hotel will seem like an unacceptable comedown.
One book that accelerated my travel was the book Die with Zero written by Bill Perkins.
One of the most significant learnings from the book was his explanation regarding the intersection of time, money, and health and how too many worked too long to the point where they had plenty of time and money but didn’t have the health to truly enjoy it. He argued that people should be spending more money when their health is better. He argues that more money on travel should be spent in their 40s then their 50s, and more in their 50s then their 60s, and more money in their 60s than their 70s because you have the health to do it. Too many wait until after they have retired to travel and they just don’t have the stamina needed. For some, due to work obligations and other factors, they cannot travel until they have retired. And for those people, I strongly recommend that you pack a lot of travel in those first few years of retirement. In fact this is exactly what I encourage and help my clients to do.
Whether it’s a trip in your car across a county or state line or a flight across the international date line, travel can create unique conditions for you and your loved ones to make incredible memories. The key is to be away from the daily requirements and to be fully present with your loved ones while you collectively experience with your 5 senses new places and things. You’ll have some incredibly memorable times as you meet with locals and read additional pages about the world, in the words of St. Augustine. You’ll also develop a broader more wholesome view of men and things as Mark Twain advised.
All of these experiences will be incredibly enriching. As Bill Perkins notes in Die with Zero, one's life is a sum of your experiences and so to maximize your life you need to maximize your experiences. He notes that memories are an investment in our future selves. Buying an experience just doesn’t buy you the experience itself–it also buys you the sum of all the dividends that experience will bring for the rest of your life. Consequently, we need to make the most of whatever health we have at every point in our lifetime and see the world around us. It could be as simple as exploring a nearby museum or park and interacting with the people in that area. All told, you should be investing and spending according to a plan so you can have even more experiences.
If you want to learn more about working with me to plan your ideal life, go to my website, betterplanningbetterlife.com. On the “getting acquainted page you can schedule a free introductory meeting that should be worth your time.
Thank you again for listening and I hope you found this helpful, now on to the tips tricks, and strategies portion of the podcast.
TIPS, TRICKS AND STRATEGIES
Welcome to the tips, tricks, and strategies portion of the podcast where I will share a few tips on how to spend less on vacation.
As I mentioned earlier in this podcast, when both my children and my business were young, we traveled by car around the Western United States and Western Canada visiting various National parks. I have always loved the outdoors and wanted to instill that same love in our 3 sons. One of the impetuses for visiting National Parks was that every 4 grader and their family gets into National Parks for free because of the wonderful Every Kid in the Outdoors program. This was Federal legislation that was passed that allowed 4 graders and their families to have free access to hundreds of parks, lands, and waters for an entire year. You just need to register online at everykidoutdoors.gov and print out your pass as electronic copies aren't accepted. We would present our paper and they gave us a plastic pass to our 4th grader. When we did this for our two oldest boys, they felt pretty special that they were able to get the whole family into the parks for free. When Lucas was in the 4th grade we visited Death Valley, Zion, Bryce, Canyonlands, Arches, Capitol Reef, Grand Canyon, and Joshua Tree National Parks. When Conway was in the 4th grade, we visited Redwoods, Crater Lake, Olympic, Mt Rainier, North Cascades, Yellow Stone, Grand Tetons, Sequoia, and Kings Canyon national parks. Our youngest son Quinton just entered the 4th grade this year so we look forward to planning our national park trips for this year.
Another travel tip for having less expensive vacations is to utilize Google Flights to scan for less expensive airline tickets. It’s important that you start watching for flights at least 6 months in advance of your trip. What that allowed me to do was determine what the usual price would be for a flight. I would monitor it regularly and when I would see the prices drop, I’d purchase the tickets. Sometimes those tickets were purchased 8 months in advance and other times they’d be purchased just 2-3 months in advance.
My final travel tip is I would recommend going for longer international trips if possible. The reason is that transportation costs, often airline tickets, can be the most expensive part of a trip. For shorter trips, travel expenses were 60-70% of the total trip cost but with longer trips, they would be 40% of the costs. Yes, your accommodation expenses would increase but there is a benefit if you’ve already spent the money to get to a location to stay longer.
Well, I hope you found these travel tips helpful. As a great friend and mentor of mine said, happiness is being on vacation or planning your next one. And with Better travel planning you can have a better life. Have a great one!
References
How much you should spend on vacation
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