| Gary Foreman is a former Certified Financial Planner (CFP) who currently writes
about family finances and edits
The Dollar Stretcher website
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Dear
Dollar Stretcher,
I am looking for guidelines on how much money to spend on
travel/vacation. We are a family of three living on about $45,000
per year. Twice each year my son and I travel to see my family. On
one of those trips my husband accompanies us. We spend almost no
money once there. So that is 5 round trip plane tickets each year.
In addition, I would like for the three of us to take a family
vacation each year.
My question is how much is
reasonable to spend total? Are there any rules-of-thumb? Percentages
or something? We have no debt other than our home and are vigorous
savers, which leads to guilt when spending. So I want to know how
much is reasonable to spend so that I don't feel guilty about it.
--Dora
Dora's right. Feeling guilty about
your vacation spending sure can ruin a good time!
According to the Travel Industry
Association we spent $584 billion on travel last year. The average
family will spend in excess of $2,200 a year on an extended
vacation. Despite a recession and terrorist activities, 57% of
Americans plan to take a pleasure trip during the first half of
2002. That adds up to a lot of vacation spending!
But, average spending numbers can be
misleading. In many ways travel is a form of entertainment that
happens away from home. And every family has different patterns of
recreational spending.
For instance, some people prefer to
spread their activities throughout the year. They spend on movies,
sports and other entertainment regularly. Other families save all
year and splurge on a vacation. Still others have little to spend
and make the most out of long weekends while staying close to home.
The goal is to get the most enjoyment from the money you spend. So
choose what works best for you.
Can Dora come up with an amount that
should be budgeted for vacations? Sure! According to the U.S.
Statistical Abstract a little less than 10% of the money we spend
goes to recreation. So, in Dora's case that would be in the $4,000
to $4,500 range. Remember, that includes all forms of recreation so
she'll need to subtract money going for other forms of
entertainment.
While it's possible for Dora to apply
that number to her family, it might not be a good idea. A better
method might be to see how their recreation spending fits in with
the entire budget. For instance, Dora's family  doesn't have a car
payment or credit card debt. So there's more money available for
things like vacations. She probably can afford to spend a little
more than average.
There's another way for Dora evaluate
their spending. That's to look for the warning signs that you're
spending too much. A big one is paying for the vacation after you've
taken it. It's hard to have a good time when you know that you're
spending money that you don't have. Saving the money before the trip
can free you to thoroughly enjoy yourself.
Another warning is when saving or
paying for your vacation becomes a burden. Providing food, shelter,
education and health care to your family comes before trips to visit
family and friends.
Once Dora's convinced that she's not
spending too much for vacations, what can she do to relax and enjoy
her trips?
Know your budget before you leave.
Plan your spending for transportation, lodging, food, amusements and
souvenirs. If the plans are reasonable there's no reason to second
guess them later.
Remember that the rules are a little
different on vacation. Eating in restaurants will be expensive.
Sometimes you won't be able to find the absolute cheapest motel in
town. And, that's ok. As long as you're staying within your budget
and not being foolish, don't fixate on how much you're spending.
Don't let unnecessary money concerns ruin a good time.
That's not to say that Dora should
abandon her frugal life style. There's nothing wrong with a lunch of
sandwiches at a city park or scenic turnoff. Her family may find
that needless spending makes them uncomfortable.
Finally, Dora might want to earmark
some of the money that she routinely saves for use on vacation. That
will help her to stay disciplined during the year. And she'll be
more comfortable spending money that's been specifically saved for
this purpose.
Hopefully Dora will make some
wonderful memories with her family. Bon Voyage!
--End--
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