If you're a woman and travel is high on your list of priorities, you're not alone. Women account for 56% of leisure travelers, according to Conde Nast Traveler. And when it comes to family trips, data shows that women make 85% of travel decisions.
But how much can you afford to spend on travel each year? Here's how to figure it out.
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What do your essential expenses look like?
Travel may be important to you, but it's even more important to cover your rent or mortgage and put food on the table. So before you can determine how much of your income to budget for travel, first, budget for the non-negotiable bills you have to cover. These should include (but may not be limited to):
- Housing
- Transportation
- Healthcare (including insurance premiums and medications)
- Food and household products
- Utilities
- Insurance (including life, auto, and homeowners)
What do your savings goals look like?
Once you've figured out how much you need to spend on essential bills, it's time to account for your financial goals, because those should take priority in your budget over travel. For one thing, figure out how you're doing on emergency savings, as near-term cash reserves should actually trump retirement savings. If you don't have enough money in an emergency fund to cover at least three full months of living expenses, then you'll need to allocate funds toward that before you can start spending on travel.
Assuming you have a fully loaded emergency fund and are working toward longer-term goals, a good rule of thumb is to try to save 15% to 20% of your income for retirement. Doing so could help ensure that you have enough income to live comfortably later in life. And also, given that Social Security cuts are on the table, it's best to err on the side of saving more for retirement than less.
How much money do you have left over?
Once you've accounted for your essential expenses and have allocated money to your long-term savings, you can see how much income you're left with and decide how much of it to spend on travel. If that figure is $5,000 a year, you may decide that you want to spend the bulk of it on trips, even if that means having little money left over for things like non-work attire, beauty products, or restaurant meals. But ultimately, any funds you choose to spend on travel will represent money you don't have available for other leisure spending.
Of course, there's absolutely nothing wrong with skimping on other expenses if travel is more important to you. But no matter what you do, don't make the mistake of racking up debt so you can travel more. Doing so could wreck your finances on a long-term basis and make it more difficult to meet your broad savings goals. And the last thing you want is to risk retiring with a nest egg that falls short because you made the mistake of taking on debt earlier in life to fund a big trip you couldn't afford.
