How to Save Money For Holiday Travel
When it comes to the holidays, many people think of getting together and celebrating with family and friends. For many, that involves some form of travel, whether it’s driving an hour or two for a same day get-together or flying a distance for a longer vacation.
Fact is, travel around the holidays is big business in the United States, with an estimated 114 million adults planning to spend a total of approximately $159 billion on flights and/or hotels during the holiday season. An analysis conducted by Nerdwallet and the Harris Poll revealed that Americans who travel during the holiday season are spending an average of $1,393 this year.
The analysis illuminates how that money gets allocated, to what degree credit cards are being utilized, and provides some ideas to help save money and time while still enjoying a holiday getaway. Let’s take a closer look.
Holiday Travel and Credit Cards
If the average traveler is spending $1,393 on transportation and lodging this holiday season, how much of that is going on credit cards? Well, for the 81.2 million travelers (71% of the total) who will use a credit card, the average is $1,105.
This leads to a figure just shy of $90 billion for total credit card spending on holiday travel this year. Now here’s an interesting statistic – the approximate amount of aggregate interest expense that will accrue on these credit card charges – assuming that they are paid off reasonably quickly (within 2.4 months) checks in at a somewhat staggering $2.2 billion.
Many of these travelers use credit cards because they lack the cash to cover travel expenses that they consider a priority, given the special quality of the holidays and the fact that many family members get few opportunities to see one another throughout the year. A full one-third of credit card users are being strategic about their card usage in accumulating miles and points with their purchases that they apply to these travel expenses.
Although $90 billion in credit card spending for holiday travel certainly isn’t chickenfeed, it’s actually down 33% from last year’s total of $135.8 billion. Similarly, this year’s average credit card expenditure of $1,105 represents a 21% drop from 2018’s figure of $1,400, both owing to general feelings of unease about the economy.
Saving For Holiday Travel
Each year, high levels of credit card expenditures on holiday travel speak to a relative lack of saving in advance for these expenses. Indeed, the analysis indicates that 31% of travelers do not save at all in advance for their holiday travel expenses, with another 18% “unsure” of when they start saving.
Another 21% begin saving within four weeks or less of their travel. This speaks to a full 70% of all travelers giving no affirmation of saving any longer than four weeks.
This leads to higher credit card usage, which of course makes holiday travel more expensive. One of the keys, therefore, to saving money on holiday travel is to initiate the process of saving for holiday travel expenses far sooner – ideally nine weeks or more – when only 18% of travelers begin, or at least six weeks or more, when 28% of travelers begin saving.
When we consider that 29% of travelers do not use credit cards at all for their holiday travel expenses, this savings timeline certainly appears to correlate directly with a reduction in credit card usage. Additionally, saving sooner makes it easier to actually purchase airfare earlier, making it much more likely to avoid expensive last-minute fares.
Holiday Travel Money Saving Tips
Holiday travel expenses are foreseeable “one-time” type of expenses that can be planned for ahead of time, and doing so vastly reduces the chances of going over budget.
Much like other predictable one-time expenses such as auto maintenance and miscellaneous home repairs, saving for holiday travel can be budgeted for throughout the course of the year. In 2018, 65% of travelers went over budget, (implying 35% did not), and again, this statistic correlates well with initiating the savings process at least six weeks prior to travel in order to ultimately save on airfare and accommodation while minimizing credit card usage.
Starting the savings process earlier is not the only way to save money on holiday travel, however. In 2019, 91% of travelers are proactively taking steps to minimize expenses in a variety of ways – including purchasing airfare based on price rather than convenience (39%), choosing a hotel based on price rather than amenities (38%), using credit card points and miles to offset expenses (32%), staying with friends and family rather than at a hotel (29%), driving rather than flying (29%), and not checking bags when flying (17%).
Timing of flights is also important, as there often are opportunities to save on airfare the week or weekend prior to Thanksgiving, as well as to save generally with early morning and/or connecting flights.
Prioritize Your Holiday Expenses
When managing your holiday expenses, it is important to recognize that if you are already spending significant sums on airfare and accommodation in order to visit family and friends, it simply may not be affordable to give extravagant gifts to these same people.
This is when giving meaningful, less expensive but more personal gifts can come into play – especially to older people whose material wants are mostly already met.
It is important to know your budget and what you are comfortable spending during the holidays, so that any holiday spending trade-offs that may arise quickly become more manageable. For many people, giving gifts takes priority over holiday travel – as a full 51% of Americans prefer to skip holiday travel altogether and wait for the spring and summer when airfare and accommodations are considerably less expensive.
However, there are those travelers who don’t value gift-giving as much. Indeed, the survey also revealed that 44% of Americans would choose not to spend money on holiday gifts for friends and family who they already are spending significant money on to visit.
About The Author: Steven Brachman
Steven Brachman is the lead content provider for UnitedSettlement.com. A graduate of the University of Michigan with a B.A. in Economics, Steven spent several years as a registered representative in the securities industry before moving on to equity research and trading. He is also an experienced test-prep professional and admissions consultant to aspiring graduate business school students. In his spare time, Steven enjoys writing, reading, travel, music and fantasy sports.
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