We know that travelling is a great investment – it allows you to take a break from work, refreshes your mind and boosts your overall productivity. Furthermore, visiting new places and learning about other cultures can be a memory of lifetime. But how much is too much when it comes to spending on vacation?
According to Rubina Ahmed-Haq, a personal finance blogger with alwayssavemoney.ca, people should allocate no more than four per cent of their annual income for vacation. “Unless you have no debt, spending more than this amount will erode your long-term savings,” Ahmed-Haq told The Globe and Mail. That means if your take-home pay is $50,000, the holiday spending limit would be $2,000.
This limit is for a good reason – in case things go wrong on your holidays, you can still go home and survive. The recent Fyre Festival fiasco is a good example of this.
I met a boy, HERE BY HIMSELF, who literally told me that this trip bankrupt him. And he paid bottom tier GA just like me. Absolutely sad.
— dylan (@DylanACOP) April 28, 2017
“Never charge your holiday on credit unless you have the cash already in the bank,” said Ahmed-Haq. “Want to spend more? Save longer.”
The four-per cent budget should cover everything, including entertainment, souvenirs and emergency fund.
“Keep a copy of your itemized budget handy in your wallet,” said Mandi Rogier at USA Today. “Check on it periodically to make sure you’re staying on track. If you find yourself overspending, you may need to cut back on tickets and souvenirs on the last few days of your trip.”