Setting a stress-free travel budget
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Advisory services offered through Wealth Enhancement Advisory Services LLC, a registered investment adviser and affiliate of Wealth Enhancement Group.
Travel is one of the primary reasons people work, save, and plan for the future. Whether it’s a bucket-list trip to Europe (Peg is soon to embark on one!), a family reunion at the lake, or a multi-generational vacation with children and grandchildren, travel often ranks near the top of retirement and lifestyle goals.
Yet many travelers devote far more time to planning where they want to go than they do planning how they will pay for it.
The good news is that meaningful travel and sound financial planning can coexist. In fact, when travel is incorporated into a broader financial plan, it can become one of the most rewarding and least stressful uses of money.
Uncover the Purpose
Before choosing a destination, it’s important to understand the purpose of the trip. Is it a chance to reconnect with family? Celebrate a milestone? Experience a new culture? Relax and recharge? The answer often determines where spending matters most.
Some families prioritize annual vacations with children and grandchildren. Others would rather take one significant international trip every few years than travel frequently. Sometimes, we’ve found clients choose travel experiences over buying a second home. Understanding the “why” behind your next trip helps align your money with your values rather than simply following trends.
Build a realistic budget
One of the most common travel-planning mistakes is underestimating the true cost of a trip. Airfare and hotel costs are only part of the equation. Travelers should also account for meals, excursions, travel insurance, airport parking, rental cars, pet care, passport fees, currency exchange costs, and, of course, souvenirs.
It’s also wise to build in a cushion for unexpected expenses. Travel rarely unfolds exactly as planned, and a contingency reserve can help avoid financial stress when surprises arise.
Travel inflation has been up sharply
Travel has experienced many of the same inflationary pressures affecting housing, healthcare and everyday living expenses.
Airfares between U.S. cities and overseas remain sensitive to fuel costs (up 26.7% in May, year over year, according to the U.S. Bureau of Labor Statistics), labor expenses and other operational factors. Hotel rates have also risen in many destinations, while tours, cruises and attractions have been costing more than travelers expect.
The result is that a trip that you may have budgeted to cost $10,000 several years ago may cost $12,000 or $14,000 today. Rather than budgeting based on past experiences, travelers should research current costs and adjust expectations accordingly. We suggest adding a 10% to 15% buffer to projected expenses to help account for inflation and unexpected price increases.
Travel tips and traps
When it comes to managing travel costs, a few strategic decisions often have a greater impact than coupons, promotions, or rewards programs.
- Traveling during “shoulder seasons” can significantly reduce costs while also providing a better overall experience. Visiting Europe in September instead of July or exploring national parks after Labor Day can mean lower prices and smaller crowds.
- Flexibility with travel dates can also produce meaningful savings. Departing and returning during the middle of the week often costs less than flying on weekends, particularly for families purchasing multiple tickets.
- Booking early enough to preserve choices (but not too early to limit attractive alternative destinations) is another valuable strategy. As flights and hotels fill up, lower-priced options disappear and travelers lose flexibility.
- Finally, travelers should focus on the experience they want rather than becoming attached to a specific destination. Similar experiences can often be found at dramatically different price points.
Save for as you would for any other goal
Travel goals deserve the same attention as other major financial objectives.
Many people benefit from establishing a dedicated travel savings account and contributing to it regularly. Giving the account a specific purpose, such as “Italy 2027” or “Family Reunion Trip” can make the goal feel more tangible and reduce the temptation to spend the money elsewhere.
As travel costs rise, savings targets may need periodic adjustments, just as retirement and college savings plans may need to be adjusted to account for inflation.
The true currency in fife is time. Don’t delay.
Travel should fit within a broader financial plan that also includes retirement savings, emergency reserves, debt management and family priorities.
At the same time, delaying every meaningful trip until “someday” may lead to bitter regret. Your health and mobility can change over time, costs may continue to rise and opportunities to share experiences with loved ones may not always be available.
Your goal should be to plan thoughtfully, save regularly and enjoy travel in a way that supports both today’s memories and tomorrow’s financial security. Bon Voyage!
The original article was published in the Pioneer Press.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
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