I recently came across an eye-opening article titled “‘I don’t have a budget’: Why people are going into debt to travel,” which left me both shocked and reflective. The article explores a troubling trend where 25% of Americans are willing to go into debt to fund their vacations. This behavior is influenced by societal and economic factors, including the prioritization of travel over traditional milestones like homeownership, the impact of the financial crisis and pandemic, and the unrealistic expectations set by social media and FOMO (fear of missing out).
While spending on travel is a personal choice, it’s crucial to address the objective reality: incurring debt you can’t afford for a vacation is risky. Creating lasting memories is valuable, but if your trip costs $20,000 or more—equivalent to a new car or a down payment on property—and you haven’t saved or budgeted for it, the financial strain could be significant. This debt may prevent you from enjoying future vacations, as you’ll be burdened with repayments that overshadow other opportunities for travel.
In essence, an extravagant vacation funded by debt can have long-lasting financial repercussions, making it essential to carefully consider the true cost before swiping that credit card. Seeing your friends take a sunset selfie in Santorini or relax on a sandy beach in Tahiti shouldn’t influence your financial decisions. After all, you’re not paying for their vacation, and you have no idea how they financed it. Similarly, they shouldn’t feel compelled to match your next trip or speculate on how you funded it. These are personal choices, and while it’s natural to be inspired by others’ travels to explore new destinations, there’s no reason to jeopardize your financial future just to enjoy a few weeks in Southeast Asia.
So if you’re contemplating a vacation that costs more than two months’ worth of your net salary, take a moment to pause and consider: How will you pay for this trip? Do you have the funds fully or at least 50% saved? Next, think about how this vacation will benefit you. While it’s true that experiences often bring more happiness and life satisfaction than material possessions, that doesn’t mean you should pursue them at any cost. If this vacation will plunge you into deep debt, those cherished memories could quickly be overshadowed by lasting financial burdens that could take months, if not years, to repay.
If traveling is something you enjoy and want to experience regularly—say, 1-2 vacations a year—consider creating a dedicated ‘Travel’ section in your budget. By allocating a specific amount from each paycheck, you’ll have the funds ready when it’s time to plan your next getaway, ensuring that your trips are financially stress-free.