How to make your post-covid vacation fit your financial plans
Anticipation can increase joy; a longer break without the luxe
Americans are eager to hit the road. Consumer research firm Hearts & Wallets, recently asked nearly 6,000 people to choose their top money-related goals from a list of 15 saving/spending/investing options.
The top two goals pretty much encapsulate the impact of pandemic life. Building an emergency fund was the top choice across four different generations. Coming in at #2: Taking a vacation.
Contradictory? Not really. Both are logical responses to what has transpired since last March. But they aren’t entirely compatible either, as dollars spent on a vacation are dollars that won’t be plumping up the emergency fund.
With a few months — potentially longer — until the all-clear, now is a great time to do some careful but enjoyable planning to land on a scheme that gives you the break you need without breaking the bank.
Enjoy the planning.
Academic research found that we get a bigger rush out of anticipating something we’re looking forward to, than the warm fuzzies we get thinking about that experience after it has occurred. So, binge on some Rick Steves travel shows or order a few (used is cheaper) travel guides to get in the mood. The Knopf Mapguides, well curated and with fold-out maps that let you picture yourself walking around Barcelona or Budapest, are great. Find Instagram accounts of great photographers in your chosen location. You can even splurge on a virtual tour (see toursbylocals.com and others). All of this will heighten your anticipation at very low cost.
Keep your financial plan nearby.
A vacation that ends up on a credit card you then can’t pay off isn’t affordable. A vacation that stops or slows down the progress you’re making on building an emergency fund, or other goals, isn’t affordable. You know that, but keeping goals in clear sight while planning can help.
Relaxing needn’t require expensive travel.
An academic working paper published in 2019 makes the case that you can set off some vacation endorphins simply with a mind shift. Study participants who were given a Friday nudge to treat their weekend as a vacation reported back to work on Monday with a higher level of happiness than a control group that did the same-old/same-old (chores, work, etc.) on the weekend.
That’s not to suggest that getting away isn’t fantastic. The research does suggest there is a non-travel way to get away, if that’s what your budget can handle best these days. Disconnect from work email, Slack and other techno leashes. And then envision your community of family and friends reopening: What are the activities you are most looking forward to returning to?
If getting away, consider length over luxe.
The longer you disconnect, the more benefit (relaxation) you’re likely to reap. A less expensive plane ticket, less expensive accommodations, the ability to eat more than a few meals while on vacation can add days to your vacation without running up a bigger bill.
Tuck away the money now.
Whether you’ve got your sights on a long-haul flight to a dream location, or a restorative staycation, the same goal applies: Pay as you go. Running up a vacation tab on a credit card you can’t immediately pay off in full can boost your all-in vacation costs by more than 15%. The current average APR for unpaid card balances is nearly 16.5% these days.
Log in to your checking account and in a few clicks you should be able to open a separate savings account. If possible rename it “vacation” or “getaway.” No co-mingling with your bill-paying money in your checking account, or your emergency savings account. Then set up a weekly or monthly auto transfer from your checking, into your vacation savings account. Can’t imagine having the cash flow to pull that off? Ahem, that’s a sign you either need to lower your travel budget, or get serious about some spending trims to free up money for your vacation pot.