The weather is getting warmer and school is winding down, and that means one thing: It’s time for a summer vacation. But, amidst continued economic uncertainty, are Americans planning to travel this summer? According to a recent survey released by TD Ameritrade Holding Corporation, the majority (78%) of Americans say yes, a summer vacation is on the agenda.
“While uncertainty remains, there have been good indicators that the economy is getting stronger and Americans are starting to feel more optimistic. That optimism can help fuel spending, so it’s not surprising to see that so many people plan to travel this summer”
Vacation often comes with a hefty price tag, especially when you factor in air travel or fuel for long road trips. But, the expense doesn’t seem to be holding people back. In fact, roughly one in four (26%) of Americans surveyed plan to spend more money on their summer travels this year compared to the last five years. Another 55 percent will spend the same. And, nearly half (48%) of Americans plan to travel more than 400 miles from home while staying in the U.S. Twenty-nine percent plan to leave North America.
“While uncertainty remains, there have been good indicators that the economy is getting stronger and Americans are starting to feel more optimistic. That optimism can help fuel spending, so it’s not surprising to see that so many people plan to travel this summer,” said Carrie Braxdale, managing director, investor services TD Ameritrade, Inc. (“TD Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation. “Everyone deserves a vacation, and with careful planning it can be affordable. Be sure to assess how a vacation fits into your long-term savings goals and make sure you don’t overspend and accrue unwanted debt.”
Like any big savings goal, it all comes down to planning. As you plan for your summer vacation, Braxdale suggests four tips to help keep you on track:
1) Start planning early. Determining things like where you want to go, how much it will cost and/or the type of vacation you can afford will help you avoid overextending and piling expenses on a credit card or worse yet, pulling funds away from long-term savings goals like retirement.
2) Develop a vacation budget. Determine what you will spend on travel, hotel, food and accommodations before your trip. Once you’re on vacation, track expenses daily and stick to your budget. Try not to overindulge on food, activities or souvenirs that you didn’t plan for.
3) Don’t get caught up in the moment. It may be the trip of a lifetime, but try not to get caught up in the moment and overspend or overextend yourself by putting it all on your credit card. You don’t want to get stuck paying it off for years to come.
Consider the long-term impact of cutting back. Cutting back on vacation expenses each year and contributing to an IRA instead could potentially equal thousands of dollars toward retirement. For example, an additional $500/year contribution into an IRA starting at age 30 until age 55 could mean an additional $39,000 toward retirement ($500 a year, 25 years, 8% rate of return).