Americans aren’t the only ones taking on debt to travel. People of all ages around the globe are traveling whether they can afford to or not and for various reasons. Millennials and Gen Zs are traveling for sporting events and concerts while Baby Boomers are traveling to spend quality time with friends and family or for bucket list experiences. Bankrate found that nearly one-third of travelers weren’t concerned about using credit cards to finance their vacation because the opportunity to escape reality was more important than money. This trend is concerning because if someone is knowingly charging something they can’t afford it’s unlikely they have formulated a plan to pay the debt off later when interest is compounding.
Alloy Wealth Management is in the business of educating people on finances, it’s our passion. While your passion may be travel, there are ways for you to enjoy adventures without going into debt to do so. As fiduciary financial planners, we typically don’t like to use the word “budget” in a sentence but, in this situation, setting a budget for a vacation is important. If you want to travel to Hawaii, for example, you’ll need to research the cost of a flight and hotels and rental cars versus ride shares and Airbnb’s and then set a budget based on your length of stay. Once you have a budget set for your trip you can create a spending plan to save for it.
We use spending plans in financial and retirement planning because they offer a clear understand of an individual’s monthly income and expenses while highlighting unnecessary spending and ways to free up money for more important things like a family vacation. Before reaching for a credit card to pay for something you want but can’t afford, contact Alloy Wealth for help navigating financial planning decisions. 800-689-3935