You can treat yourself to a vacation without draining your savings.
People are starting to spend and travel like they did before the pandemic. Taking advantage of low prices for flights and accommodations can be exciting but travel has other costs.
More than 131 million people are fully vaccinated in the United States as of May 25, according to the Centers for Disease Control and Prevention, and according to a survey by Zelle, most people are ready to take a trip. The payments company found 68% of people plan to travel this summer.
“Impulsivity is going to run rampant this time of year. It normally does because school's out for summer, but because of the pandemic, everybody wants to travel,” said Farnoosh Torabi, Zelle partner and host of the “So Money” podcast.
Traveling within the US may be easier than traveling internationally. Many states are lifting travel restrictions. If you’re trying to take advantage of low rates, traveling abroad isn’t out of the question. Several countries have lifted travel restrictions or plan to do so this summer, so make sure to check which destinations are open to tourists before booking. Make sure to check the CDC guidelines for domestic and international travel.
You can treat yourself to your first post-vaccine vacation without draining your savings account. Here’s how to financially plan for your trip.
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You probably saved a lot of money this past year. Taking your first vacation in a while probably sounds thrilling, but you shouldn’t drain your savings in one trip.
It’s important to set an overall spending limit for your trip — just remember to remain flexible to accommodate any unforeseen charges. If you have a savings account dedicated to travel, determine how much of that money you’re willing to spend. If you don’t have a separate travel fund, you may want to set aside a portion of your savings for the future. Make sure you’re contributing money to both accounts regularly. Set up automatic contributions from each paycheck so you’ll always have a healthy fund for trips.
You may want to jump on the first travel deal you see, but make sure you spend with purpose, said Torabi. There’s going to be pressure to go somewhere lavish because social media is starting to glorify travel again, she added. Even if you take advantage of flight and hotel deals, make sure you factor travel insurance, transportation while you’re there, food, drinks, and shopping into your overall budget and stick to it.
Your first trip doesn’t have to be extravagant and expensive. Torabi suggests asking yourself what kind of experience you want to have this summer. She said: “You can put all of your eggs in one basket, like going to Hawaii, but for me I’d rather fill up my weekends going to the beach or bringing people to my house and rekindle relationships.”
Whether you’re looking to travel ASAP or in a few months, the best way to take advantage of car rentals, lower flight and hotel prices is to be flexible. You’re more likely to get the best bang for your buck if you’re open-minded to dates and destinations, said Torabi.
“There's a fervor for travel right now because of the [uptick in vaccinations],” she said. “So if you're flexible and can kind of wing it, you're in a better position to find deals.”
While flights and accommodations might be cheap, renting a car for one day can cost more than a round-trip flight because car rental companies have few cars to rent, said Jonathan Weinberg, founder and CEO of AutoSlash. A majority of rental companies sold up to 50% of their cars during the pandemic and can’t keep up with demand, he said.
Car companies may have limited inventory, but it’s not impossible to find a rental car this summer.
Being flexible on your travel dates and destinations will give you the best chance to find a rental car.
“If you're able to book three to four weeks out, then the rates won’t be nearly as steep,” said Weinberg.
You may be drooling over low airfare to places like Hawaii, Wyoming, Montana or Alaska, but car rentals in these areas are “pretty much sold out for the entire summer,” Weinberg said. You’ll have better luck in the Northeast and Midwest right now, he added. If the major rental companies are sold out, he suggests browsing car sharing sites like Turo and GetAround.
If you’re a more spontaneous traveler, “you’ll probably have to do it without a rental this year because if you’re booking at the last minute, [cars] are going to be gone,” said Weinberg.
If you’re planning a trip with family or a group of friends, look for accommodations with group discounts, said Torabi. For example, rent a home big enough to fit your group and split the nightly cost.
If you’re the trip organizer, Torabi suggests putting purchases like the house, groceries and house necessities on your card and having your friends pay you back. “That could lead to more savings for you because your credit card is gaining those points. You could take those points and put it towards a hotel room at some other point and treat yourself,” she said.
Even if you’re vaccinated, the pandemic can still affect your vacation. COVID-19 is still spreading in some countries, and the health situation in your destination can change rapidly. Travel insurance can cover you if you need medical care during your trip or have to cancel your vacation altogether.
Travel insurance companies will now cover your medical benefits and cancellations if your trip is affected by COVID-19, said Steven Benna, a marketing manager for travel insurance comparison site Squaremouth. Insurers are also willing to tweak policies to accommodate travelers who need to make changes to their trip because of the pandemic, he said. For example, some companies will let you use coverage for a future trip if you cancel a vacation after purchasing a policy.
The biggest things you’ll want to consider when buying a policy are COVID-19-specific coverage, medical coverage and trip cancellation coverage. If you’re traveling within the United States, your health insurance will likely cover your medical expenses. If you’re traveling abroad, consider buying medical coverage in case of health emergencies, said Benna. Some foreign countries require travelers to purchase insurance to enter the country, he added.
Before you book your trip, he suggests checking the CDC guidelines for your destination. “Some countries require a policy that can cover COVID-19 related medical expenses, and others just require a policy with general medical coverage,” said Benna.
You’ll also want to tell your credit card company that you’re traveling. If you don’t it may flag your foreign purchases as suspicious activity and freeze your account. You may want to carry cash in case you lose your card on vacation, especially if you’re going abroad.
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