How much vacation spending is too much? Whether it’s a beach vacation to a tropical island in the middle of the sea or a log-cabin, mountain adventure, we can all use a nice getaway every now-and-then.
Between the Surf and Turf dinners and the $10 piña coladas, luxury vacations are not cheap. It is crucial that you create – and stick to – an appropriate budget when planning your next retreat.
With that said, there are a couple of frequent questions that we hear when vacation planning is underway.
Is it OK to take a vacation if all of your consumer debt has not been paid off?
We are big fans of Dave Ramsey, and if you’re reading this on our site, chances are, you are too. Dave Ramsey’s second baby step toward financial freedom is paying off all of your consumer debt. Depending on where you stand financially, this may bring your extravagant vacation planning to a halt.
In our latest podcast episode, Zak expresses his agreement with Dave in that you probably shouldn’t be planning a vacation if you still have consumer debt you are working through. You definitely shouldn’t be planning any extravagant vacations.
One of Zak’s suggestions is taking a vacation that is within reason. By this he means, don’t blow the bank on a couple of days on a tropical island. If you live in Denver, load your family into the car, drive to the mountains, and spend a couple of nights being one-with-nature.
Sleep in a tent under the stars. Cook hot dogs and s’mores over the campfire. Taking a small weekend getaway with your family doesn’t have to be something that will hinder your financial future.
If you have no debt (way to go!), this next question may better pertain to your situation.
How much income should be allocated to budgeting for my vacation?
Simply stated, this is no set amount. There is no concrete percentage of your income that you should be setting aside.
It all depends on your current financial situation. Everyone has different expenses, everyone has different desires when it comes to planning their vacation. This is something that you should consider talking to a financial professional about.
Budgeting is not just the physical act of setting aside ‘x’ amount of money each month; it takes careful vetting and understanding of where your money is coming from and where it’s all going. Make sure every dollar is accounted for each month when you sit down to articulate a budget.
We get it. We all need a nice vacation every now-and-then. We just recommend sitting down, and truly creating a detailed budget. Look at whether or not a vacation is in the cards. If it isn’t, cut out some of the frills. Or all of the frills. Take a vacation you can afford.
Also, make sure you know where the money is coming from when you create your budget. Whether it’s a vacation or a new car or a home or a burger at McDonalds, understand where all of your money is coming from and where it’s all going. Again, every dollar from your cash flow should be spoken for.
If you have some budget-setting tips, we would love to hear it. Drop us a note on our website or message us with your money-savvy techniques.
Not quite sure how to begin budgeting? Let us know as well, and we would be happy to help!
To hear more about budgeting for your next vacation, check out the Mind of a Millionaire podcast.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy assures success or protects against loss.