I am often asked how much a family should spend on vacations. While that is entirely personal, most experts recommend that 5–10% of your net income can be spent on vacations.

Many factors may change this number. Maybe you have a large family or your kids are into expensive sports. You might not have that income to spend on a lavish vacation.

But to spend any amount on a vacation, you need to budget. You cannot go into debt. So how do I do it? I will share a great strategy in this episode of Best in Wealth.

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Outline of This Episode

How to budget for a vacation

You cannot go into debt to purchase a vacation. I have done it. I had a great time. But when I got home, the guilt and regret sunk in. That is why I firmly believe you need to have a spending plan.

We set a monthly budget. Then, we have a separate spreadsheet that lists all of our non-monthly line items. It covers things like Christmas gifts, oil changes, car insurance, and vacations.

All of these items are added up. If the number is $12,000, we divide it by 12, and save that money in our “escrow savings account.” Every time a non-standard monthly expense comes up, we use that money to pay for it. Those things will not disrupt our budget.

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Be aware of luxury creep

If you are going to Disney, there are a lot of different hotels to choose from in Orlando, right? You can stay at the Holiday Inn and Suites or choose from numerous luxurious hotels and resorts. Do not let yourself get lured in. Budget within your means.

I spent a lot of time budgeting for our trip to Europe and I have saved for a couple of years. We are working within our budget. When it is all said and done, I will be proud. I am getting to spend time with my family within the budget I have set.

Be aware of entitlement creep

Do not let entitlement justify overspending on vacation. You are grinding every day at your job. You are exhausted being a parent. You deserve a vacation. But do not spend too much because you “deserve” it. It will eat you up inside.

It is not about keeping up with the Joneses. Just because your neighbor stayed at a five-star hotel and was waited on hand and foot does not mean you should. Do not allow yourself to be talked into something you cannot afford.

You know who you are. You are listening to a financial podcast. You are a budgeter. But you cannot be afraid to take a vacation. A vacation is investing in your family, investing in improving your mental health, and investing in lasting memories. Remember, vacations with your loved ones are an appreciating asset.

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The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the US Securities and Exchange Commission in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.