What we'll cover
The benefits of spending limits on vacation
How to set the right limits for your budget
Tips and tricks for sticking to your limit
The minute you arrive at your destination, a vacation mindset sets in. Put on your bathing suit, grab a cocktail and treat yourself — but not so fast.
Before you get carried away, don’t forget about the impact on your finances — because while what happens in Vegas might stay in Vegas, your credit card statement will follow you home. Setting a spending limit for your trip helps you stay on track with your other money goals. Find out how to maximize your travel fun while keeping spending in check.
Benefits of spending limits
You’ve worked hard for your vacation, so it’s tempting to throw caution to the wind and indulge your every desire on your getaway. But it’s important to remember you have other financial responsibilities and goals. Being mindful of your spending on vacation and sticking within a predetermined range ensures you won’t regret going overboard once you get home.
In addition to staying within your overall budget and having enough to fund your other goals, setting limits has other perks as well. Having a ceiling in mind can help you get creative on vacation. You’ll be more motivated to seek out low- or no-cost activities during your trip. And we all know that sometimes the best things in life are free. In an effort to save some cash, you just might discover some off-the-beaten treasures you can’t put a price on.
Sticking to a spending plan on vacation is also great practice for the rest of your life. When you come home, you’ll have some budgeting best practices you can apply to other expenses and goals. For instance, maybe you discovered some delicious inexpensive street food on your trip, and now you’re inspired to find cheap eats in your hometown. Or perhaps you prioritized a massage over souvenirs, and now you’re ready to put more of your money toward experiences than things in your everyday life.
Set your own limits
Paying for at least some aspects of your trip with a credit card may be a smart choice. You can take advantage of points and rewards and may be able to reap special benefits if you have a travel-specific card. Plus, credit cards are a secure and convenient method of payment (just keep an eye out for fees if you are traveling internationally).
If you want to keep your spending in check, you could technically ask your credit card company to lower your limit. But that could negatively impact your credit score and be more trouble than it’s worth. Setting our own personal limit encourages responsible spending and can even help you save on interest.
Limiting spending on vacation ensures you won’t regret going overboard once you get home.
Keep your credit utilization low
If you’re paying with a credit card, limiting your spending on vacation will also help keep your credit utilization low. This measure of how much available credit you're using is a big factor in your credit score. Keeping your credit utilization below 30% is ideal. Your credit score impacts applying for a mortgage, personal loans and auto loans, so you want to keep it in tip-top shape.
It’s always smart to keep your credit utilization in a range you can comfortably pay back on a monthly basis. You may want to limit your credit usage before travel to ensure you have more available credit if emergencies or unexpected expenses pop up while you’re away.
Stay on budget while traveling
So how do you stick to a spending plan on vacation? First, determine your priorities. Maybe you’ll choose economy accommodations because you’d rather spend your money out exploring. Or you might decide to travel in the off-season rather than compromising on your destination. It’s all about balance. Make an itinerary for your trip so you can map out your expenses beforehand, and don’t forget to build in a cushion for surprises or hidden costs.
Save money for future expenses
By setting limits for your trip, you’re doing a favor for your future self. Once you’re back to reality, bills will be due. And you’ll likely want to start stashing away cash for your next big adventure — whether that’s more travel, buying a home, refreshing your wardrobe or any other goal you can dream up. By keeping your spending in check, you’ll be prepared for whatever comes next.
Spend smartly on vacation
Travel is one of life’s greatest pleasures. But you don’t have to overspend to enjoy your trip. Set reasonable limits and make the most of your vacation without breaking your budget.
