As summer approaches, many of us are dreaming of sandy beaches, mountain getaways, and long-overdue family adventures. But while summer travel is an opportunity to recharge, it can also pose a threat to your long-term financial goals — if you don’t plan ahead.
The good news? With a bit of strategy, you can enjoy your vacation without derailing your retirement contributions, savings plans, or monthly budget. Here’s how to prepare financially for your summer travels — so your wallet can take a vacation too.
Related: How to Create a Monthly Budget
1. Create a Dedicated Travel Budget
Before booking, determine how much you can realistically spend on your trip without dipping into emergency savings or cutting back on retirement contributions.
What to include:
- Transportation (airfare, gas, rental cars)
- Lodging
- Meals
- Activities and excursions
- Souvenirs
- Pet care or house sitting
- Tips and taxes
Once you have a total in mind, break it down into weekly or monthly savings goals leading up to your trip. Treat it like any other savings goal — automate contributions to a separate “vacation fund” if possible.
According to a 2024 Bankrate survey, a one-week vacation in the U.S. for two people costs, on average, $3,982. Knowing this, it’s essential to ensure your budget aligns with your financial situation.
Pro tip: Look at last year’s spending for reference. If your summer trip ended up costing more than expected, adjust accordingly this year – and consider setting aside a 10-15% “buffer” for surprises.
2. Don’t Pause Your Long-Term Goals
It can be tempting to scale back on 401(k) or IRA contributions to free up funds for travel. But pulling back, even temporarily, can set your long-term goals off course.
Here’s why: If you reduce a $500 monthly retirement contribution for three months, that’s $1,500 not invested. Assuming a 7% average annual return, that could mean forgoing over $10,000 in future value over 30 years.
Instead:
- Stick to your regular retirement and savings contributions.
- Consider temporarily reducing discretionary spending – think of it as redirecting funds, not sacrificing.
- Use travel as motivation: Try a “spending detox” in the months before your trip and channel that savings into your travel fund.
- Use cash back or points to supplement your travel costs (more on that below).
3. Maximize Credit Card Points and Miles
If you’ve been collecting credit card rewards, now’s the time to cash them in strategically. Depending on your card, you might be able to use points for:
- Flights and hotels
- Rental cars
- Excursions and attractions
- Statement credits for travel-related purchases
If you recently listened to our podcast episode with credit card expert Elliot Rosenberg, you know that not all redemptions are created equal. Aim to get the highest value per point or mile — often found in transferring points to airline or hotel partners rather than using them through a generic portal.
Important: If you’re using credit cards for travel purchases, only charge what you can pay off in full. Interest charges (often 18-25% APR) can wipe out any rewards benefit.
4. Watch Out for Hidden Travel Costs
Even the most meticulously planned vacations can be derailed by unforeseen expenses. To ensure your summer getaway doesn’t strain your finances, be vigilant about these common but often overlooked travel costs:
Foreign Transaction Fees
When using your credit card abroad, foreign transaction fees can quietly accumulate. These fees typically range from 1% to 3% of each transaction, with many cards charging around 3% . For instance, spending $2,000 internationally could result in an additional $60 in fees.
Opt for credit cards that waive foreign transaction fees. Cards like the Chase Sapphire Preferred and Capital One Venture Rewards are popular choices among travelers for this very reason.
Currency Exchange Pitfalls
Exchanging currency at airport kiosks might seem convenient, but it’s often costly. Airport exchange services can offer rates that are 7% to 15% worse than those at banks or ATMs, and may tack on fees ranging from $5 to $15 per transaction.
Use local ATMs upon arrival for better exchange rates. Or, consider prepaid travel cards like Wise or Revolut, which offer competitive exchange rates and fee-free transactions, though be mindful of potential delivery or inactivity fees.
Roaming Charges
Using your phone abroad without an international plan can lead to exorbitant charges. Some travelers have reported being charged up to $2.00 or more per MB of data, leading to bills in the thousands.
Before traveling, check with your mobile provider about international plans. Alternatively, consider using an eSIM to access local data plans without swapping physical SIM cards.
Travel Insurance
While it might seem like an unnecessary expense, travel insurance can save you from significant financial losses due to trip cancellations, medical emergencies, or other unforeseen events. According to recent surveys, about 50% of Americans have purchased travel insurance, with 15% doing so for every trip.
Evaluate your trip’s cost and potential risks to determine if insurance is worthwhile. Some premium credit cards offer built-in travel insurance benefits, which can provide coverage for trip cancellations, delays, and lost luggage.
Related: 5 Instances Where Travel Insurance Is Worth It
5. Plan Now, Relax Later
By taking the time in May to thoughtfully plan and budget for summer travel, you give yourself the peace of mind to fully enjoy your trip. Financial wellness doesn’t mean skipping vacations — it means preparing for them smartly, so you return home with lasting memories and no regrets.
Need help aligning your travel plans with your financial goals? A quick check-in with your advisor can help ensure your summer spending stays on track without sacrificing what matters most in the long run.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.