Financing Family Vacations

The annual summer family vacation!  Memorial Day means another school year ending for most students any day now, it also means packing suitcases and heading someplace fun.  Those one or two weeks every year might be the focal point (besides Christmas) for parents & children alike.  But, how do you not let vacation break the bank?

How Much Does The Average Family Vacation Cost?

According to a 2014 American Express survey, the average family of four is expected to pay $4,580 for the annual vacation! That comes to $1,145 per person.  Other financial experts estimate the typical family will spend between 2% and 10% of their annual income for the annual vacation.

It is estimated that the average American family spends $1,145 per person for their family vacation.
That's $4,580 for a family of four.

 

Truthfully, I was shocked when I heard these statistics until I started looking at all the different people that require payment to help you enjoy a vacation.  Typically we spend at most $600 per person for both annual trips combined, mostly by splitting expenses with the extended family. Although my wife & I spent about $1200 each when we honeymooned in Prince Edward Island, Canada (it's the only honeymoon we will ever have and have no regrets for this splurge).

How The Costs Add Up

As we plan our own family vacations (one with each side of the family), I am looking into some of the following expenses as we make our own travel plans and how we intend to save money this year.

Transportation

Planes, Trains, & Automobiles!  Yes, it's the title of a classic 80s comedy, but how you get to & from your destination can be the most expensive part of the trip.  Especially if you fly.

Automobile
Living near Knoxville, TN we can be at the beach within 6 hours or to downtown Chicago & Washington D.C. in about 7-8 hours.  We also have a small airport with minimal direct flights & it also happens to be the 94th most expensive U.S. airport. In a nutshell, we can essentially drive most places cheaper & quicker after including time to pass through airport security and catching the connecting flight.

A WalletPath study shows that 48% of American will drive over 500 miles when on going on vacation.

A lot of Americans are taking to the road this summer.  It is projected that Memorial Day 2016 will be the 2nd-most traveled Memorial Day holiday, partly due to the cheapest gas prices in 12 years.  A WalletPath study  shows that 48% of Americans surveyed will drive at least 500 miles for their summer trips.  The same WalletPath study also lists the three most common vehicles that will be driven: SUV (28.5%), Mid-sized car (25%), & Trucks (12%).

Two of the top three vehicles are traditional “gas-guzzlers” that might get about 20 miles per gallon on the highway (although some SUVs get more).  While I might miss the bachelor days of driving my Mustang that would get 27-30 MPG on the highway, I understand why families take the SUV, truck, or minivan.  It's extremely difficult to cram everything into a car trunk & magically squeeze in a car seat or two.

Gas prices are expected to hover in the low $2 range for most of the summer.  This is awesome because the money saved at the pump means you can go to a more distant vacation spot or have money to offset another expense like lodging or meals.

Financing Family Vacations Planes
Even though gas prices have dropped, airline fares have remained flat. The national average for a round trip ticket is about $390.  For those of you who can take advantage of Southwest fun fares or have tons of frequent flier miles, I tip my cap to you.

Airfare was the most expensive part of our honeymoon trip.  Even today, a round-trip flight for two adults from Knoxville to Chicago O'Hare costs $629 ($315 each person).  According to GasBuddy.com, I will only pay about $101 in gas in our family vehicle that gets 24 mpg on the highway.  There is wear & tear on the car, but I can sit in the car for 8 hours one way to save $500.

When we do fly, we compare prices at websites such as Hotwire.com img 634eb9040335f .

Rental Car & Parking

Rental cars & parking are the two variables when traveling.  If you are with family or friends, you might be able to ride in their car & not get a rental vehicle.  The same goes for parking fees at your home airport.  If you drive yourself, you will pay about $10 or more for each day the vehicle is parked.

 

Lodging

Lodging is the other most expensive part of a vacation.  Where you stay will also determine how much money you pay for food.  With both sides of my family, we usually rent a place through VRBO img 634eb90437bfd .  There are some other great rental platforms too, but this is what we are familiar with.

We typically choose to rent a house or cabin that has separate bedrooms for each family, located in a more secluded environment than hotels, and the rental also comes with a kitchen.  Like hotels, you can book a rental as extravagant as the Ritz Carlton or as basic as a Motel 6.  Obviously, rentals with more amenities or excellent locations will cost more.

For your next vacation, I encourage you to compare prices for staying in a hotel versus renting a house/cabin.  You might be surprised how similar (or cheaper) in price one is compared to the other.  If you travel as a large group, the potential savings with renting through VRBO img 634eb90437bfd can be way cheaper than a hotel.

Our target price is about $100 or less per night per family.  This similar dollar range will get you a room at the Hampton Inn or Holiday Inn Express that have clean rooms & continental breakfast but do only come with a microwave & mini-fridge.  While we do enjoy a couple meals at restaurants, we still like eating homemade food as much as possible.

Food

Financing Family Vacations What you eat is the last variable cost for vacation.  We usually go to the grocery store once or twice on a trip.  If a store is nearby, it's handy because you can buy what you need as needed so you do not have to think about leaving extra food behind that might not fit in your suitcase or safely make the car ride back home.

If you go out to eat expect to pay the following prices:

Breakfast: $5-8 per person
Lunch: $10-$15 for fast food & sit-down restaurant per person
Supper: $15+ per person at sit-down restaurant
*Children might cost half that amount depending on what they eat & type of restaurant

As I mentioned earlier, we like vacationing on the cheap but we still visit one or two restaurants in the town we are visiting.  It's nice to not cook after being away all day or when taking a day trip to an adjacent city.  Plus, locals are always proud to recommend their own favorite restaurant….”Eat at Chuck's, they have the best clam chowder in the state.”

We usually research sites like Trip Advisor & Yelp to find restaurants we like.  And we ask the locals too.  I enjoy my wife's cooking & she is a very talented cook, so we try to find places that offer something we normally don't make at home.  Like going to lobster pounds when visiting Maine or Canada & a gourmet hot dog venue in Charleston, SC.  For us, it's the principle of not paying $10 or $15 a plate for a bowl of spaghetti or chicken parmesan makes for a fraction of the cost the remaining 51 weeks of the year.

How To Save For Vacation

So far, I hope you have calculated how much you normally spend on the items I mentioned above (transportation, lodging, & food).  If you fall into the average of spending $4,580 each year, that might be one or two month's paycheck that is spent within a week or two.

To avoid being surprised when the bills start rolling in, it is best to be proactive by setting money aside before you go on vacation.

“No Touch Account”

This is the practice my wife & I are taking this year with our household budget.  I didn't have a good name for it until I recently read an article on Fruclassity!  It's very simple.  Put a certain amount of money each month into a “no touch account” that is specifically designated for vacation.  We fund it from the proceeds we make from one of our side hustles & it goes into an online bank account.  It's a different bank than the one we use to pay our monthly bills with so we don't accidentally use it to pay the electric bill or our credit card bill.

You do not need a completely different bank to make this work.  Some banks let you have multiple accounts under the same checking or savings account.  You can open a sub-account titled “Vacation” & all your money will still be in one place.

Save Spare Change & $1 Bills

I read about this in a book once & thought it was a cool idea.  The author went on a ski trip.  His roommate for the weekend was a guy who paid for his trip by putting all his $1 bills in a coffee can.  After a year or so had passed (it's been about a decade since I read the book), he had enough to afford the current ski trip he was on.

You might know it as the “latte factor.”  If you have a dollar bill or loose change in your wallet or car, you are very likely going to buy a candy bar or drink with it at the gas station or break room.  Instead, put that money in a “piggy bank” and wait for it to fill up.  You might be surprised how much money you accumulate in a month, 6 months, or a year.

I tried it shortly after reading about it and cannot remember how much I saved.  It wasn't enough to go on vacation, but it was more exciting than finding loose change between the seat cushions.

Vacation with Family & Friends

This isn't exactly a savings technique, but it can greatly reduce costs.  I've mentioned throughout the article how we save money by splitting costs with others, lodging in particular.

Case in point, we rented a small house for our honeymoon for about $700 for 5 nights.  It could have housed another couple had we traveled under other circumstances & halved our lodging cost instantaneously.  Plus, we would have received all the benefits of a very nice waterfront house cheaper than the cheapest hotel on the Island.

Turn You Staycation Into A Vacation

I hope these tips will help you turn a staycation into a vacation.  While any week away from work is a good week, it's usually better if you can also get away from life.

Vacation doesn't have to be expensive to be called a “vacation.”  Children & families have fun just being together and doing something fun.  It can be building sand castles at the beach or hiking a new-to-you national park.  Yes, we all splurge on vacation, but it doesn't mean you should work like crazy all year for one or two weeks out of the year.

How do you save for family vacation?  Do you think $1,185 per person is high, low, or about average for your vacations?

Thanks For Reading,

Josh

 

 

 

 

 

 

 

 

 

 

 


Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.