Millennials prefer to “maximize their 20s” by minimizing their savings – but could that leave them with a spartan lifestyle in their later years?

When in Rome: Millennials prefer to

When in Rome: Millennials prefer to “maximize their 20s” by minimizing their savings – but could that leave them with a spartan lifestyle in their later years?

Jessica Choi first picked up an addiction to travel during family trips to China during her summer vacation when she was a child.

Now 26, with a career and income of her own, she has gone from exploring her heritage to adventuring in other far-flung places like South Korea and Switzerland. And through her TikTok account, @jessicawantsanap, she is attracting nearly 28,000 followers.

There is a huge demand for content like hers on social media these days. The “travel” hashtag on TikTok has racked up nearly 119 billion views with thousands of videos showing beautiful montages of foreign destinations.

But many of these influencers aren’t just encouraging their followers to virtually accompany them on trips. One particular trend is that they motivate other young people to spend big money on travel while they are still young, at the expense of financial security for themselves when they are older.

The phrase on repeat is: “I will get my money back, but I will never be 20 years old and I will never go to [location] again.” They argue that once-in-a-lifetime experiences far outweigh the costs.

While it may seem irresponsible, experts say travel and financial stability shouldn’t be mutually exclusive. Here’s how to make it work, whether you’re decades or days away from retirement.

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Why the younger generation prefers travel

Many older generations believe that their youth is meant for hard work and that retirement is a time when you can relax and enjoy the fruits of your labor. But certified financial planner Akeiva Ellis says the guidance doesn’t resonate with the younger generation.

“More and more people are realizing that life is not promised to them,” says Ellis.

The COVID-19 pandemic has changed the priorities of almost all Americans, changing how they can spend their free time and money. Personal savings rates soared, mortgage delinquencies fell, and credit card debt was paid off.

But for many Gen Zs and millennials, the loosening of restrictions has caused them to put their savings on hold to prioritize meaningful experiences right now.

According to a survey conducted in June 2022 by wealth management company Personal Capital, 55% of respondents aged 26 to 41 said they spend more time planning a vacation than retiring.

Ellis understands why so many young people live for today – after all the uncertainty of the past few years, their own health may be at risk or they may have to face other responsibilities that interfere with their freedom, such as caring for a child. Darling.

“For many people, it makes sense to maximize their 20s in this way and see as much of the world as possible before they reach these important life milestones.”

How to budget on vacation

Ellis says that while the intangible benefits of discovering new places can often replace the “dollars and cents” aspect for some people, there are ways to make travel affordable and stay on top of your financial goals.

Making plans is a great start. “Look ahead, say, ‘OK, what are my upcoming trips I want to take this year?’ And start saving money to cover expenses.”

Then see how you can “travel hack”. A few years ago, Ellis and her husband traveled to Dubai and the Maldives “for free” using rewards and credit card bonuses.

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 enough.

There are also always deals or discounts if you decide to combine hotel and flights.

Read more: Here’s the average salary every generation says they should feel “financially healthy.” Generation Z demands a whopping $171,000 a year – but how do your own expectations compare?

And, Ellis adds, don’t forget to account for day-to-day expenses when budgeting. Food and experience can add up, especially if you want to soak up the culture of your surroundings. Make sure you’re prepared for some extra spending: Tsoi recommends budgeting for 5 to 10% extra spending just in case.

Finally, keep in mind that a vacation trip doesn’t have to include flying all over the world – you can take trips or travel around the country, which can help cut costs considerably.

Is it worth risking your financial stability for the sake of traveling?

But although travel is a priority for Tsoi, she would not recommend getting into debt because of this.

If your credit card balance is going to last longer than your memories of the trip, Choi says it might not be the right time to run. She adds that traveling only makes sense if you can still afford fixed living expenses like rent, utilities and groceries and pay your monthly credit card bill on time.

Getting into debt – for any reason, travel or not – can leave you without a buffer if unexpected expenses arise. And having a balance on your credit card can affect your credit score, making it difficult to apply for other forms of credit, such as mortgages or personal loans.

Also, with rising interest rates and stubbornly high inflation, the high interest you accumulate could leave you stuck in a debt cycle.

Tsoi finds the right balance by saving money primarily for retirement and emergencies – all that’s left goes to travel or other entertainment.

And she emphasizes that you should prioritize what you value most in your life. For her, this is a journey. Tsoi’s priorities may change over time, but until then, she will happily balance 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 any warranty.

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