Money & Career

How much do you spend on vacations?

Some say you should spend no more than 4% of your after tax income on vacations a year -- and don't go into debt. But is that realistic? How much is too much to spend on a vacation?

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In these days of job losses and economic austerity, vacations seem like the ultimate luxury. For a family of four, a vacation can set you back thousands of dollars, what with flights, car rentals, hotels and food. Just for a week or two of fun. 

But while it might be hard to justify the cost, I believe a vacation is a great investment. Spending money to see the world or explore a new place with your family is worth it for me. In fact, it can change your life for the better. As a teenager my mother took me on a three-week road trip through England – the experience transformed my (previously quite narrow) view of the world. I caught the travel bug in a big way and even ended up living in England for several years in my 20s.

A love of travel is something I want to pass on to my kids and giving them an opportunity to see the world is a priority for me.

But how much is too much to spend on travel and vacations? In this Globe and Mail article earlier this week, one money blogger says you should spend no more than four percent of your after-tax income on vacations every year – so if you’re earning $50,000 after tax, your vacation budget should be no more than $2,000. Moreover, according to one advisor quoted in the same article, going into debt to fund your trip isn’t a good idea.

I’m not so sure about these recommendations – after all, people go into debt for overpriced houses, cars and furniture. Two thousand dollars won’t get a family like ours very far especially when we have dreams of taking the kids to Europe and Asia one day.

Personally, I think life is short and if travel to far away places is on your bucket list and you’re disciplined enough to save and put money away for it (or pay off any vacation-related debt) then carpe diem and go for it.

Do you agree? How much are you planning to save for your vacation this year? And how much in your view is too much to spend on a vacation?

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