Family vacations provide a perfect opportunity to relax, spend quality time with loved ones and enjoy life. During these financially pressing times, with stress and money worries a part of our every day lives, planning for downtime or preparing for an adventure this summer can be a chance to rejuvenate and reenergize ourselves – but at what cost?
A family vacation can be a budget buster if you over sentimentalize and rationalize the cost by telling yourself that you are making memories that will last a lifetime. Sharing experiences and family bonding are important, but it is necessary in this uncertain economy to plan and budget as much as possible. Knowing up front what you can afford to spend, will give you a head start on the relaxation and stress relief you seek.
According to a recent American Express survey, many households are expected to spend about $1,200 per person on family vacations. For the typical middle-class, median-sized household, with an income of roughly $50,000 and an average household size of 4 people, that translates to an estimate of 5% to 7% of annual income spent on getting away from it all. The latest American Express Spending & Saving Tracker finds that interest in going on family vacations this summer remains strong. Almost 140 million people (59%) are planning a summer vacation.
So how much should you spend on a family vacation? Knowing what you can afford to spend is the first step. Never mind the rough estimate of what others may spend. Some will spend far more and others much less. And given the current unemployment rate, there are many people who aren’t planning any vacations this year. A look at a recent Business Pulse survey, offers a quick peek into the minds of what readers are thinking in regards to spending for family vacations. Of the people polled, 16% said they are planning to pay 20% more than last year, 14% said that they would pay slightly less than last year, 14 % said they would spend about the same. 7% of those surveyed said they would pay slightly less than last year, while 11% said they would pay at least 20% less than last year. And the biggest percentage of all – a whopping 30 % of the participants polled said, what vacation?!
Even if your neighbors and colleagues are choosing to spend a fair amount of their income on a family vacation, doesn’t mean it’s financially responsible for everyone to do so. You should not let other people’s spending habits influence how you spend your own hard earned dollars. What you choose to spend your money on is a reflection of not just your interests, but your priorities as well. What is important to your friends and neighbors may not have such a high priority on your list.
Family vacation budgets come in every shape and size, but there are some key reference points that can help you stay on track and determine expenses while you plan. Here are some tips on how to keep from spending the next twelve months paying for this year’s family vacation, long after that tan has faded away.
Keep in mind the cost of a vacation varies based on the luxury level, location and length of stay. Toss in flight costs, ground transportation and other incidentals and it can easily get out of control. Make each of these elements a line item in your budget and break down these costs into a number that works for you.
Setting a budget ahead of time may sound like a buzz kill, but in order to maintain some financial security, it is critical to live, work and play within your means. Take a realistic look at how much of your cash or savings you are willing to put toward a summer vacation. Make spending money a part of your budget planning, too. No vacation should be so inflexible that you panic about buying a trinket or t-shirt.
Find a balance between your time and financial limitations. Nothing is more valuable than time, so factor that in when you are thinking of places to go. Seek out destinations and experiences that are closer to home, in order to maximize your vacation time. This will not only give you more time to vacation instead of traveling, but will also lessen your transportation costs, saving you money overall.
Everyone has a bucket list of adventures and destinations they’d like to visit once in their lifetime. However, not every family vacation has to be on your trip of a lifetime list. Use your budget and time frame as a guideline when planning for this year’s family vacation. Use the “dream vacation” ideas as your motivation to start or keep saving for future trips.
How much you should spend on a family vacation is really up to you. According to The Travel Insider, “a vacation is supposed to be your personal reward to yourself, and is your entitlement, your return for all of the hours, days and weeks you spend working and leading your normal life.” Keep in mind all of the reasons you want to go on a family vacation in the first place. Some of the most memorable events during a family vacation happen during the simplest activities. Use your imagination to create some magical moments and memories. Done right, family vacations are the best of all possible worlds – a chance to reconnect, build strong bonds, have fun, relax and enjoy life together. It is possible to do all that and not break the bank, too.
I would budget roughly 1/3 of my annual ‘disposible’ income for vacation, knowing that I am putting 1/3 away for savings and the other 1/3 for any unexpected expenses that come up.