When in Rome: Millennials are opting to ‘maximize their 20s’ while minimizing their savings — but could it leave them living a Spartan life in their later years?
Jessica Tsoi first caught the travel bug on family trips to China over summer break when she was a kid.
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Now 26 years old, with a career and her own income, she’s gone from exploring her heritage to adventuring across other far-flung locales like South Korea and Switzerland. And through her TikTok account, @jessicawantsanap, she brings along her nearly 28,000 followers.
These days, there’s a huge appetite on social media for content like hers. The “travel” hashtag on TikTok has almost 119 billion views with thousands of videos showcasing beautiful montages of overseas destinations.
But many of those travel influencers aren’t just encouraging their followers to come along virtually on their trips. One particular trend has them motivating other young people to spend big on travel while they’re still young — at the expense of their older selves’ financial security.
The phrase on repeat is: “I’ll make my money back, but I’ll never be in my 20s and traveling to [location] again.” They claim that the once-in-a-lifetime experiences far outweigh the costs.
While it may seem irresponsible, experts say travel and financial stability don’t have to be mutually exclusive. Here’s how to make it work whether you’re decades or days away from retirement.
Why younger generations are prioritizing travel
Many older generations follow the belief that their youth is for working hard, while retirement is when you’ll be able to relax and enjoy the fruits of your labor. But certified financial planner Akeiva Ellis says that guidance doesn’t resonate with younger generations.
“More people are waking up to the fact that life is not promised,” Ellis says.
The COVID-19 pandemic shifted priorities for nearly all Americans, changing the way they were able to spend their free time and money. The personal savings rates jumped, mortgage delinquencies decreased and credit card debt was paid down.
But for many Gen Z and millennials, the easing of restrictions led to them hitting pause on their savings in order to prioritize meaningful experiences right now.
According to a June 2022 survey from wealth management firm Personal Capital, 55% of respondents aged 26 to 41 said they spend more time planning for vacations than their retirement.
Ellis understands why so many young people are living in the now — after all the uncertainty of the last few years, it may not be long before their own health is compromised or they have to face other responsibilities that hinder their freedom, like caring for a loved one.
“It just makes sense for a lot of people to kind of maximize their 20s in that way, and see as much as they can of the world before they reach those major life milestones.”
How to stay on budget on vacation
Ellis says that while the intangible benefits of experiencing new places can often supersede the “dollars and cents” aspect for some people, there are ways to make travel affordable and stay on top of your financial goals.
Mapping out your plans is a great start. “Look ahead, say, ‘Okay, what are my upcoming travels that I want to do for the year?’ And start putting money aside to help cover the costs.”
Next, see how you can “travel hack.” Ellis and her husband traveled to Dubai and the Maldives “for free” by using their credit card rewards and bonuses a few years ago.
Tsoi’s own credit card gives her access to airport lounges, and she plans to use her points to treat her parents or grandparents to a business class flight once she’s saved up enough.
There are also always deals or discounts out there if you choose to bundle your hotel and flights.
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And, Ellis adds, don’t forget to factor in day-to-day expenses when you’re drawing up your budget. Meals and experiences can add up — especially when you want to soak up the culture of your surroundings. Make sure you’re prepared for some extra expenses: Tsoi recommends budgeting about 5 to 10% extra just in case.
Finally, keep in mind that going on vacation doesn’t necessarily have to involve flying across the world — you can do road trips or travel domestically, which can help cut costs significantly.
Should you compromise your financial stability for travel?
But while travel is a priority for Tsoi, she wouldn’t recommend going into debt for it.
If your credit card balance is going to last longer than your memories of the trip, Tsoi says it might not be the right time to jet off. She adds traveling only makes sense if you can still afford your fixed living expenses, like rent, utilities and groceries, and paying off your monthly credit card bill in time.
Going into debt — for any reason, whether it be travel or not — can leave you without a buffer if unexpected expenses pop up. And carrying a balance on your credit card can impact your credit score, which makes it harder to apply for other forms of credit, like mortgages or personal loans.
Plus, with interest rates on the rise and inflation still stubbornly high, the expensive interest you’ll accumulate could leave you stuck in a cycle of debt.
Tsoi finds the right balance by setting money aside for her retirement and emergencies first — whatever’s left over goes into travel or other fun activities.
And she emphasizes that you’ve got to prioritize what you value most in your life. For her right now, that’s travel. Tsoi’s priorities may change in time, but until then, she’ll be happily walking the line between living in the moment and preparing for tomorrow.
“Whatever makes you happy.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.