Rental car prices have increased by up to 300% in popular domestic destinations, according to AutoSlash, a rental car deal finder. The cost of accommodation is also on the rise. Vacation rental site HomeToGo saw a 70% increase in the average price of rental accommodation booked by September compared to last year.
It’s no surprise that people want to go out, but the combination of a year stuck at home with an âI deserve thisâ mentality can lead to budget problems down the road.
Here are some tips if you are planning a big trip this summer.
Be realistic and consider compromises
For those who were able to save more due to stimulus checks and / or being stuck at home last year, it makes sense to spend some of that money on travel. Instead of estimating how much you’ve saved, take a close look to determine your budget.
Be realistic about costs beyond âstuckâ costs like airline tickets and accommodation costs to get a clearer picture. Plus, think about the tradeoffs at this price.
âI think where people have problems is when we don’t know what we’re negotiating about when making a decision,â said Derek Hagen, financial behavior specialist and founder of Money Health Solutions.
For example, would you prefer to take this trip or have a weekly appointment for two months? Or go on a longer vacation next year?
Avoid impulse bookings
It’s important not to make impulse purchases when it comes to travel, Hagen said.
One tactic he recommends is the âovernight testâ. The more you participate in this night test, the better. Just put something in your basket then come back in a few days and see if the desire still exists. If you still want it (the hotel, the plane ticket, the all-inclusive resort offer), you can buy it, Hagen said.
Live with it a bit before pulling the trigger so your vacation doesn’t become an impulse buy. âIt’s not a game of deprivation, it’s just a game of intentionality,â he said.
Consider how you pay
If you have a travel rewards card, it’s time to use those points, provided you can pay off the balance.
âTravel points and credit cards can be a very smart strategy. If they can use the points system, go for it, âsaid Jacquelyn Nasca, financial advisor at Wilkinson Wealth Management in Virginia. But Ms Nasca, who is a certified financial advisor, warns that if a person doesn’t have the money to pay for their trip at the end of the month, all those points won’t be worth it.
While some may be tempted to use their emergency savings money for summer travel, Ms. Nasca is against it. The pandemic may slow down, but job loss or other life changes may still occur. Instead, she recommends developing a plan that keeps a fund intact for rainy days of three to six months.
Wait for it
Some predict that prices will come down over time, so it might be worth the wait.
SHARE YOUR THOUGHTS
How do you generally plan your summer budget? Join the conversation below.
âWhile we are currently seeing a higher average booking value for summer bookings made through HomeToGo, we expect the value to change as more last minute bookings for short trips arrive and the year is progressing, âsaid Caroline Burns, public relations manager at HomeToGo.
Think about why you want to travel and if it really is the destination that matters.
Part of the value of planning a trip is purely psychological, said Dan Ariely, professor of psychology and behavioral economics at Duke University, of people’s willingness to pay for more expensive vacations despite the cost. He also said that much of the value of booking a trip comes from the anticipation of the trip and the memories that follow, which often outlast the physical trip itself.
“It is very difficult to determine whether it is rational or not,” said Professor Ariely. âCovid has taken away our ability to plan. Having a plan, including a vacation plan, has many psychological benefits. “
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Write to Amber Burton at [email protected]
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