Guilt Free Vacations

by Gary Foreman


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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!


Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and he's a regular contributor to CreditCards.com. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.

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