For Jessica Tsoi, 26, travel has always been a big part of her life since she was a child and went on family trips during summer vacation.
As an adult with a career and her own income, she continued to explore countries like South Korea and Switzerland, documenting her experiences under the TikTok handle @jessicawantsanap, where she has nearly 28,000 followers.
The hashtag “travel” on TikTok has nearly 119 billion views with thousands of videos featuring beautiful montages of overseas destinations. Besides inducing an instant wanderlust, the videos often promote the fashionable but controversial idea of spending big on travel while you’re young.
The repeated phrase is: “I’ll get my money back, but I’ll never be in my twenties and I’ll never travel to [location] again.” They claim the once-in-a-lifetime experiences far outweigh the costs.
But should you dip into your savings to make the most of your youth? Experts say travel and financial stability don’t have to be mutually exclusive.
Certified Financial Planner Akeiva Ellis explains that the old adage that you have to work hard in your youth to enjoy your retirement no longer applies to younger generations.
“More and more people are realizing that life is not promised,” says Ellis.
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Lots of Gen Z and Millennials put their savings on hold in order to prioritize meaningful experiences right now – especially after the COVID-19 pandemic left them cooped up at home for months.
Tsoi says many people may have bolstered their savings during the pandemic restrictions and are now using the extra money to travel around the world. She takes at least one trip that requires a flight every four months, but also likes shorter weekend trips.
According to a June poll by wealth management firm Personal Capital, 55% of respondents aged 26 to 41 said they spend more time planning their vacations than planning their retirement.
Ellis says that when you’re older, your health may be compromised or you may face other responsibilities that interfere with your freedom, such as care.
“It makes sense that a lot of people max out their 20s in this way and see as much of the world as possible before reaching those important life milestones.”
How to stick to your budget on vacation
Ellis says that while the intangible benefits of discovering new places can often replace the “dollars and cents” aspect for some people, there are ways to make travel affordable and stay on top of your financial goals.
She says the more you can plan ahead, the better. “Look ahead, say, ‘Okay, what are my next trips that I want to do for the year?’ And start putting money aside to help cover costs.
Ellis also recommends the “travel hack,” in which you max out your credit card rewards and bonuses for expenses like flights and accommodation. She says she and her husband went to Dubai and the Maldives “for free” a few years ago taking advantage of these benefits.
Tsoi mentions that she used her Chase Sapphire Reserve card to access the airport lounge and is saving up her points to treat her parents or grandparents to a business class flight. She also suggests bundling hotels and flights for deals and discounts.
It’s important to keep unexpected costs in mind along the way – Tsoi says it’s a good idea to budget an extra 5-10% in case your plans change or in case of an emergency.
And Ellis says part of the planning process includes setting a budget for how much you plan to spend while you’re actually on vacation. It’s easy to stay on budget when you book your flights and accommodation, but harder to stay on track when it comes to experiences and food. Especially when you want to soak up the culture of your surroundings.
“I had this mentality of, ‘Oh, you’re only here once, go to that restaurant.’ I am that person.
Ellis also explains that traveling doesn’t have to involve traveling around the world – you can take road trips or travel within the country, which won’t cost as much as booking a plane to the Maldives, for example. .
Flights alone can eat into your travel budget. Personal finance site ValuePenguin notes that traveling to one destination can often account for half of vacation spending – with average airline fares amounting to $3,304 for households.
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Should you compromise your financial stability to travel?
Tsoi says not exactly. “I don’t think it’s worth going into debt. And it’s something that stays with you for quite a while.
Getting into debt for a vacation can impact your credit score – which lenders use to determine if you’re a reliable borrower when applying for mortgages or more credit – and the interest makes it harder to pay off that trip unbelievable.
Americans already hold a lot of household debt – the Federal Reserve Bank of New York says it’s soared to $16.51 trillion in the third quarter of the year. And with inflation still keeping prices high and Fed rate hikes raising interest rates, it becomes even more expensive to borrow.
Tsoi thinks traveling only makes sense if you can still pay your fixed living expenses, like rent, utilities and groceries, and pay your monthly credit card bill on time.
She is also putting money aside for her retirement and savings — whatever is left is for travel or other fun activities.
And she insists that you should prioritize what you value most in your life.
“For me personally, right now it’s comfort, convenience and utility… I’m going to upgrade a flight, like an upgrade to business class. A little more leg room, I’ll save a bag, or I’ll stay at a little nicer hotel.
She adds that she doesn’t usually spend money on other things like getting her hair and nails done or decorating her apartment, but that might change later if she makes more money or her priorities change.
“Anything that makes you happy.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.