Financial Hacks for Millennials: Vacation Without the Guilt Trip
Newsflash: Millennials have made traveling a top priority — more so than other generations. According to one source, 47 percent of Americans age 18 to 34 prioritized travel over home ownership, as compared to 26 percent of those 45 and up.1
“In contrast to the stereotype, many of the Millennial clients we see are not sitting in their parents’ basement, drowning in student debt, and too broke to afford anything,” says James Matthews, Financial Professional with Consolidated Planning, a financial services firm in Charlotte, North Carolina. “They’re often affluent, young professionals who are eager for new experiences before settling down.”
On average, millennials spent $4,594 on vacations in 2017 and are forecasted to spend even more in the years ahead.2 Funding that travel takes planning, especially if saving for future goals is on the horizon. Here are some ways to affordably scratch the travel itch and plan financially-guilt-free trips.
“It’s ok to treat vacations as seriously as any other priority,” James says. “If travel is important to you right now, it deserves to have some of your resources put towards it.” Every month, direct a portion of your savings toward travel goals. A financial professional can help you determine an appropriate percentage, based on your income and plans.
Beware of FOMO
“Pop-up” travel opportunities — like a destination wedding — can be an invitation to financial disaster, says James. “If you don’t have savings set aside, you may end up using your credit cards — and we’ve seen the aftermath when clients have racked up a huge debt.” He cautions to not let “fear of missing out” lead you to engage in expensive travel you can’t afford.
Unlike their parents, millennials are seizing the opportunity to combine business and leisure travel. In one study, 73 percent of millennials ranked leisure time on business travel as important, while only 46 percent of boomers thought so.3 Book-ending a business trip with a few days for sightseeing is a great way to stretch a travel budget.
Many millennials prefer to skimp on accommodations — staying in hostels and low-cost Airbnb rentals — while splurging on first-class experiential activities, like mountain trekking, safaris and sailing trips. Travel apps can help you discover discounted packages, low airfares and cheap last-minute tickets to popular events. Also, keeping your lifestyle relatively consistent as your income grows will help prevent “lifestyle creep” and free up additional savings as your priorities and obligations change.
Create a Line-Item
As millennials settle down, their wanderlust is typically redirected into family vacations and traveling for children’s activities. “When we work with clients at this life stage, we’ll make sure there’s a line-item in the budget to cover the cost of vacationing, travel sports leagues or band competitions of their children, and the like,” James relates.
The Savings Habit
“Millennials are good savers instinctively, but many of their goals are relatively short term, which makes sense” he reveals. Ideally, all of us should be saving 15 to 20 percent of our income. A strong savings habit can fund travel goals, while still setting aside some money for longer term objectives, like starting a family, buying a home, or starting a business. While saving for retirement can be ramped up later, younger millennials can consider protections like disability insurance, to safeguard their income and life insurance, to protect their loved ones.
So, Millennials, keep on traveling, whether by land, sea or air, but make it part of an overall savings plan to make the most of your near- and long-term goals. Bon voyage.
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2018-62517 Exp. 07/2020