By: Laura Walton AFC®
About 2% of our spending goes to vacations – but that’s an average of all kinds of vacations – from driving and staying with relatives to flying and staying in a hotel. I’ll share a low-cost, high-value vacation a friend took recently but, before that, let’s look at our average spending in all categories.
Asking others about their spending isn’t considered polite. Unfortunately, that leaves us with no basis of comparison for our spending habits. When I see over-spending in a client’s budget, it’s helpful to share the averages. Seeing how far outside the normal range you are can be a powerful incentive to shine a bright light on your spending. So let’s take a look:
You’ll see percentages in the far right column so you can easily translate what you spend in each category and compare it to the averages. Keep in mind that at higher incomes, basic expenses (food, housing, transportation and healthcare) should represent a lower percentage of the total. In this case, these four categories represent 56% of spending which is consistent with the 50-20-30 budget concept (50% of spending on fixed costs, 20% on financial goals and 30% on discretionary spending).
Let’s go back to the fun stuff – vacations. Unfortunately, Americans use only about half of their available vacation days and 61% actually work while they’re away. The French do better – 89% take their vacation days which average 30 a year. Much the same is true in Great Britain. And, between 2005 and 2013, we took 30% fewer domestic vacations and 36% fewer international trips. We clearly have some catching up to do!
We have friends that travel extensively. Some travel on their own inexpensively while others prefer a more guided experience. Tom Wuelpern, a friend, neighbor and local builder, posted his recent trip to South America on ExpeditionPortal.com. Titled “Exploring Patagonia, Argentina – in a Clown Car: Two guys, plus one tiny car, equaled one big adventure,” his stunning pictures and fun narrative share this great travel experience while introducing you to a website to inspire your travel dreams. One note of caution, I’ve read that Americans spend more time planning vacations than on their finances – don’t be one of them!