Planning a Vacation in a Time of Inflation
Vacation during a time of inflation is doable with these budget-friendly tips.
What We'll Cover
- What inflation is and how it’s impacting travel
- How to build your vacation savings
- How to create a vacation budget
- Tips for cutting vacation costs
Do you need a getaway? While navigating high travel costs may seem daunting during a time of inflation, you can still get the vacation you deserve with some careful planning. Taking time to plan for a budget-friendly vacation can help you manage expenses and enjoy a much-needed trip without derailing your finances – and the fun.
What is inflation?
Simply put, inflation is the loss of buying power – meaning your dollars and cents won’t be able to purchase as much as they did last month or last year. Inflation happens when there’s an abundance of cash in the economy chasing fewer goods, causing businesses to raise prices to meet demand. While inflation occurs naturally over time as the economy grows, too much annual inflation means cash doesn’t go as far as it used to.
Since mid-2022, consumers have been experiencing the highest inflation in a generation. In May of 2022, the Consumer Price Index noted that prices were up 8.6% from May 2021 – the largest increase since 1981. While prices have come down in 2023, the Consumer Price Index still shows that prices were up 6% between February 2022 and February 2023.
How Inflation is Affecting Americans’ Vacation Plans
Despite inflation getting to record highs last year and extending into 2023, Americans plan to travel more in 2023. A Forbes.com survey found that 87% of respondents expect to travel at least as much as they did in 2022, with 49% reporting that they expect to travel more.
In order to afford all this travel, 45% of respondents are allowing for a higher travel budget in 2023 than they spent in 2022. Additionally, 46% said they are likely to change their plans due to inflation.
If you’re in the majority that still plan to take a vacation during this time of inflation, there are steps you can take to minimize the impact of inflation without sacrificing the quality of your summer getaway.
4 Steps to Plan a Budget-Friendly Vacation During Inflation
Here’s how you can make your vacation more affordable in 2023.
1. Do a Budget Check
Let’s start with a monthly budget check-up. If you don’t keep close tabs on your budget, it’s time to go through your spending from the past couple of months. With rising costs, the amount you’re spending each month on groceries, gas and household items may have gone up since the last time you looked. You’ll get a clear picture of how inflation has been impacting your bottom line.
2. Create a vacation budget
Now that you’re up to date on your monthly spending, you can start planning how much you can afford for your vacation. Remember, with inflation at historic highs, your dollars may not go as far as they did in years past.
According to the Travel Price Index, transportation costs like airfare and fuel went up by 26.5% from February 2022 to February 2023. During that same period, lodging prices increased by 7%, while food and beverage costs went up 8%.
As your vacation time approaches, build a vacation budget. Do your research to find out how much you can expect to spend on airfare or gas, lodging, food, activities and purchases like souvenirs or other keepsakes. Be realistic about what you’ll spend and add in a buffer to reduce any potential financial stress.
3. Create a Memorable Staycation
Staying home during your time off can be a blast! A staycation shouldn’t mean sitting in front of the television or computer or getting caught up on your household chores. Instead, switch things up and get to those bucket list activities around town that you keep putting off.
Head to the high country for a day hike and a break from the heat. Rural Arizona has a seemingly infinite number of campgrounds where you can stay either for free or very cheaply. And what better vacation entertainment is there than a night under the stars? If the outdoors isn’t your thing, plan a spa day at home or invite friends over for a backyard barbeque.
4. Use Points and Find Deals
Summer may be the perfect time to cash in those unused credit card rewards or travel points. A credit card with a stellar rewards program can help trim down that vacation budget.
Depending on your credit card rewards program, you can use travel rewards points on everything from airfare, rental cars, and cruise packages.
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Keep an eye out for bargains. While travel expenses are higher than they were last year, you can still find deals out there. Many of these bargains require a mix of spontaneity and flexibility – which also happens to be the formula for a memorable adventure. You can find steals on airfare and lodging through LastMinuteTravel.com. You can also make sure your lodging budget doesn’t get out of hand by turning to AirBnb or Vrbo to find budget-friendly options for your vacation or staycation.
- Do a budget check to see how inflation has been impacting your bottom line.
- Create a vacation budget for airfare or gas, lodging, food, activities and souvenirs. Add in a buffer to reduce any potential financial stress.
- Consider a staycation to do the things you’ve always wanted to do in Arizona.
- Use credit card rewards and sites like AirBnb to get the most out of your travel budget.
Inflation may be pushing up prices across the board, but that doesn’t mean you can’t have a memorable vacation. Having a clear picture of your budget and how much you can afford to spend on travel will help you narrow down your options. Then, with a little research and planning, you can hit the road or take to the skies without breaking your budget.
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APR = Annual Percentage Rate