Spending money on vacation is easy to do. It's one of the weirdest money phenomenons I’ve noticed. People spend way outside their normal limits while on vacation. It’s as if we enter a casino where money has no value because everything is clay chips.
Vacation money is crazy money. With millions of people itching to travel after the pandemic is over, revenge spending is all the rage! But you can stay financially disciplined while still having a great time.
During the first week of our two week European business trip, we stayed at reasonably priced 4-star hotels. We figured, let’s focus on hotels in the best locations since we’d only be visiting each country for 2-3 days.
For dinner, we budgeted 50 € ($60) or less for two. This amount was reasonable as boiled beef and potatoes didn't cost too much, nor did pizza, pastas, and salads. A buffet breakfast was always included in our hotel stay so we never spent very much on lunch if anything at all.
Like with everything, we spent well within our means because we’re frugal that way. After all, it’s very hard to achieve FIRE without aggressively controlling your spending.
When we arrived at our hotel in Paris from Budapest it was about 7:15pm. We were given a tour of all the facilities. This is where our money discipline began to unravel. Spending money on vacation within a budget can be challenging even for the most frugal of us. The thrill of new experiences abounds.
Living It Up Like A Boss And Spend Money On Vacation
To welcome us, our hotel left a bottle of champagne on our coffee table. Wonderful! We drank the entire bottle. We were having so much fun that we didn't realize it was already 10:45pm when our stomachs started gurgling. But it was too late to go out for some food.
Instead of holding out until the morning by going to bed hungry, we ordered 38 € spaghetti bolognese through room service. We figured, it was worth spending a 18 € premium to have food delivered so late in the evening. The rationalization of spending lots of money had begun! To the hotel’s credit, the bolognese was exquisite. We left a 5 € tip.
Where's The Free Buffet?
The next morning we moseyed down to the hotel lobby for what we thought would be another delicious buffet breakfast since we had had one every morning the week prior in Czech, Austria, and Hungary. To our surprise, breakfast was not included.
Before we could pretend we weren't hungry to save some money, we were ushered to a breakfast table by an eager hotel staffer who suggested fresh mango and multi-berry juice. Sure, why not. I love fresh juice! When we got the breakfast menu, there were no prices, a sure sign that we’d be in for some pain.
Since we ate late and didn’t know any of the prices, we decided to eat light to hedge ourselves. We could always eat more later. This was an establishment where it is embarrassing to ask for the price of anything. As they say, “If you have to ask, you can’t afford it!” We didn’t want to look like paupers.
It turned out that only sharing a french toast was a wise move because our breakfast bill came to 41 € ($50) with the two juices! At least the French toast was damn good in Paris, just like how Peiking duck is damn good in Beijing. You see, things really are much more expensive in places like Paris than San Francisco, the cheapest international city in the world where all foreigners should buy real estate.
Having spent 46 € including tip on breakfast, we figured we might need to increase our dinner budget from 50 € to 100 – 150 € per meal. Paris is more expensive than the Habsburg Empire countries, and we wanted to eat well, so we absolutely did.
Spending Money At The French Open
Before arriving in Paris, I e-mailed the hotel concierge about French Open tennis tickets. They wrote back:
580 € Category I (best seats)
460 € Category II
390 € Category III
I was shocked because I remembered eight years ago getting tickets at the stadium entrance from scalpers for 50 €. Thus, instead of buying the tickets through the concierge, we decided to try our luck getting some scalped tickets.
We walked around the entire Roland Garros complex and there wasn’t a scalper to be found! It seems like all the scalpers have moved their business online as it’s more efficient, safer from the police, and probably more profitable. Have you too figured out how to build your brand online? If not, it's time to get going.
Disappointed, we decided to make the most of our outing by eating some wonderful patisseries at the Molitor/Auteil area before taking a train ride to the Eiffel Tower. From there, we walked to the Invalides and then back to our hotel.
The concierge greeted us and asked if we had any luck. I told him “no” and requested two, 390 € Category III tickets to the French Open for tomorrow. He apologized and said the tickets were now 420 € each. Drat. We had rolled the dice and lost.
Waiting For The Right Moment
I had been delaying my purchase because of uncertain weather conditions. If there was rain, we'd have to wait. And if the day got rained out, we were told we wouldn't get our money back because we were buying the tickets on the secondary market.
I'm glad we waited because the French Open was actually delayed for 2-4 hours the first two days we were there, and got completely rained out for the first time in 16 years on May 30 when we left to go watch the Warriors win game 7 of the Western Conference Finals at home!
Paying 8X the face value of tickets is absurd, but I rationalized it as a “foreign visitor's tax” and a necessary premium for buying at the last minute.
If I came all the way to Paris for the French Open and didn't attend, I would feel like a complete idiot even though I knew that back home, I'd never pay more than face value for tickets! In the end, spending close to $1,000 for a couple tickets was worth it.
Why Do We Spend So Much More On Vacation?
I’ve thought long and hard about why frugal me spent so far over budget while on vacation and here are the reasons I’ve come up with. Spending money on vacation was so easy to do. Yet I have so much trouble spending at home.
5 Reasons Spending Money On Vacation Is So Easy To Do
Take a read through these reasons why I think spending money on vacation is so easy to do. Let me know what I'm missing.
1) When will we ever come back?
Given I’m on a mission to see a new country every year, the chances of me going back to France within the next five years are small. The last time I was in Paris was when I visited my mom for a week in 2008.
Since we never know when we’re going back, we might as well live it up right? We may never return! The attitude is kind of like knowing you’ve only got so many years left to live. Time to spend to the max because we can't take our fortune with us.
2) Business expense.
I don’t travel for leisure. I travel for business. If I happen to experience some pleasure while on business, so be it. There’s no law that says you can’t have fun while working.
Given most of my travel expenses are deductible, I often rationalize that the cost is free because my business entity is paying. The reality is, I own my business, so there absolutely is a cost. I’m just getting about a 30% discount because that's my effective tax rate.
I had a blast taking a family ski vacation in Palisades Lake Tahoe. It was the first real ski vacation we ever took and I wrote about it. Then I developed a business partnership with the resort. As a result, part of the ski trip is a business expense.
3) Proving others wrong.
Given I put myself out there online, I’m often subjected to judgement by others who think I’m too frugal or too cheap for my own good. Every time I get judged, I get a little annoyed because how I spend my money is a personal decision.
Telling me I’m too focused on money when I write a Personal Finance blog is stupid. Are you going to tell a travel writer she's too focused on travel? Telling me I don’t stop to smell the roses enough is ridiculous since roses are all I’ve been smelling since I engineered my layoff at the age of 34!
Or telling me that I’m cheap because I drive a Honda Fit is insulting to Rhino because he’s the best car a driver could have in the city. I sometimes catch myself spending money on vacation more than normal to “show them” I can blow money and not give a damn with the best of them.
4) Sunk Cost, Proper balance.
I’m a big fan of discovering financial harmony through ratios. For example, I’ve got a fiscal responsibility ratio (FS-FR) that is measured by taking the value of your house divided by the value of your car. The higher the number, the more fiscally responsible you are. You don't want to be the guy renting a one bedroom and driving a Porsche at age 35.
Given my suite cost over five figures for seven nights, it’s silly to keep food and entertainment spending at normal levels. I already did that while I was in Czech, Austria, and Hungary so it was time to open up the wallet in France. When you've already sunk $10,000 into a vacation, what's another $500 right?
5) Telling ourselves “We're worth it.”
Perhaps the biggest reason why it’s easy spending money on vacation is because we tell ourselves we deserve it. Justifying our spending because we’re worth it is how many people get into massive consumer debt.
Credit card companies make huge money off the “I’m worth it” crowd, and a whole fintech lending niche has emerged to also capitalize on excessive spending.
I told myself that spending ~$1,000 for two French Open tickets was OK because I was able to get to a 5.0 USTA ranking so late in life. Less than 3% of players are rated 5.0 or better. Most played college tennis and started with a 5.0 rating and then as they aged trended downward, not up. Ain't I worth it? Finally, I told myself that I'm working every day in Paris, so why not live it up a little.
Spending Money On Vacation With Control
Controlling vacation spending is different from controlling day-to-day spending. The average American worker has 16 paid vacation days a year but only takes four days off according to the US Travel Association. Whereas in France, they get 31 paid vacation days a year, and they probably take most of them.
Therefore, there are really only 1 – 5 weeks in a year during which the average person can blow up their finances and get into major credit card debt! While this time period is relatively short, you can still do a lot of damage spending money on vacation.
Here are some no-brainer tips to control your vacation spending.
In fact, I've put together a vacation spending guide to help you spend more responsibly while still having a good time. I believe people are spending way too much on vacation to their financial detriment.
1) Write out a budget in Excel.
Start with an overall budget and then break it out with each line item expense. For example, my total travel budget for two was ~$5,000 a week. From there, I broke down everything in an Excel spreadsheet for flights, hotels, food, entertainment, and transportation.
I made my budget fit what was available and not the other way around. You may still go over budget, but at least you have a general idea of how much you can spend. I know a $5,000 a week budget equals $250/night for hotel, $150/day for food, and $200/day for entertainment if I take economy class.
Now, I just review my cash flow online to look at the big picture.
2) Take out enough cash to pay for all food and entertainment.
Presumably you will pay for your flights and hotels with your credit card. For everything else, take out the amount of cash needed to cover your budget and lock your credit cards away. To further control your spending, prepare separate envelopes of cash.
Any money left over from each envelope may be placed in the next day’s envelope. Not only will you save on 2 – 3% foreign credit card transaction fees, you’ll also save yourself a trip to the ATM, which also charges a fee if you aren’t a premier banking member.
3) Look for local alternatives.
Hotels and tourist hot spots charge premiums because they can. If you want to save max money, then your goal is to be as local as possible by reading all the guide books and online reviews available.
If you have a friend who lives where you are vacationing, definitely reach out for food and entertainment advice. Consider renting an apartment through Airbnb instead of a hotel. Or, if you can stay with a local, even better.
I never eat at Fisherman’s Wharf in San Francisco because the prices are 30% higher and the food quality is 30% lower than comparable restaurants. I know all the secret gems in our neighborhood. Our goal as travelers is to find out where those gems are.
4) Analyze your previous credit card bill before departure.
Hopefully none of you have revolving credit card debt. Credit card interest rates are higher on average than what Warren Buffet has returned a year in his illustrious career.
I’ve found it’s very helpful to not only be aware of your previous credit card bills, but the exact line items that made up the bill. The more you are aware of your spending habits, the easier it is to control. You don’t want to be saddled with long term debt thanks to temporary joy.
5) Multiply everything by 1.7X.
For day-to-day spending control, it’s good to multiply the potential spend by 1.5X to get the amount of gross income required to afford the item, service, or experience.
Given there are often foreign exchange and transaction fees when spending money abroad, multiple everything by 1.7X after you’ve completed the exchange rate calculation.
The goal is to make you aware of how much you need to earn so you don’t go overboard. Heck, multiply everything by 2X to make the math easier!
Ideally, you bring a credit card with no foreign transaction fees when spending money on vacation. You can save a lot avoiding unnecessary fees.
You Only Have So Many Vacation Days To Enjoy
Despite highlighting how easy it is to overspend on vacation, I’ve never once regretted the money I spent. Have you? The only thing I adjust is the amount of vacation time spent traveling because traveling can get tiring sometimes.
The experiences we gain from vacation or business travel are priceless. The key is to make sure our experiences don’t fade too quickly by creating picture albums or writing posts about our experiences. Having a blog is my perfect solution. When I'm old, I'll be able to still reminisce the good times.
I used to dread those 10+ hour international flights, but now, I see the time as a great opportunity to write a couple posts in between a movie and a nap. If you can turn vacation travel into business travel, you’ve got yourself a winner!
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If you’re working full-time, the most expensive part of traveling is taking time off of work to do so. E.g., if you make 100k per year pre-tax, get about 75k after tax, and work 1840 hrs (52wks – 2wks holiday – 4wks vacay = 46wks), that comes out to a little over $40/hr, or $320/8hr workday. If you’re already spending so much just to have the time to be there, what’s a few hundred extra dollars?
sam,
any thoughts about living it up in las vegas for a short vacation?
it aint the same in vegas on a super fruval budget. staying at the motel 6 off the strip vs on the strip at Wynn or Belagio…
what are your thoughts on gambling in general? i know the house has the edge, but nothing can compare to a streak at the craps or blackjack table.
where do you stay and what do you like to do in Vegas?
Wow that french toast though. It’s basically just bread with egg right? How does one get away with charging basically $50 for that, even WITH the juice
Man, it’s been so long since I’ve been on vacation. Will keep all of this in mind going forward. I’m hoping to go to Japan this, or next year. Hoping dividends can cover a good portion of it. :)
DB
I can relate a lot to this article. I am flying to France next week to watch my national team play in the EURO 2016 soccer finals. And I’m going through the same rationalizations as you about my spending while there. My budget is way lower than yours but still quite higher than my daily expenses. I’ve gotten used to make myself relax when it comes to spending while on vacation. I consider it a present to myself for all the sacrifices.
One thing I do to calculate my spending while on vacation is to deduct the amount of money I’d spend at home(food, gas, going out). I’ll be traveling Europe for 3 weeks. At the end the real expense for me is the flight ticket. During this trip I’ll be using AirBnB during my stay in France for half of time, then I’ll be staying with relatives and friends back in Albania.
As far as credit cards and cash, I plan to bring some cash with me, but I’m not worried about transaction fees. I was in London last thanksgiving and I used my Capital One, and it was great. No fees, and great conversion rate. I think the only other CC that doesn’t charge fees while abroad is Discover.
If you’re still in Paris next week, let’s grab a coffee! ;)
I just noticed that you’re back to SF. Maybe, next time! :D
Love your blog! My husband and I are definitely guilty of “who knows when we’ll come back here!” attitude. We went to Melbourne for the Australian open in January and stayed at the Crown Towers, where most of the top players stayed as well. It was nice seeing Nishikori and Dmitrov at breakfast each morning, so the $12,000 cost of 1 week stay in Australia (also went to Sydney), in my opinion, was easy to justify. We also did a Maldives/Dubai trip couple of years ago in one week that cost $30,000 (we stayed at a beautiful water bungalow with plunge pool in Maldives and Burj al Arab in Dubai, which made up for most of the cost). We fly economy! We still save about 75% of our net income and live way below our means when we’re at home, so “we are worth it!” :) My motto has always been work hard, play harder!
Oh wow! The Aussie Open is the only major I haven’t been to. Have you been to the others, and if so, how does the Aussie Open compare? I just love the French Open. I just don’t love the cost. The US Open you can just get a ticket for $50-80$ right in the front no problem.
Maldives….. on my list next time I go to Asia for some diving.
The Australian Open was amazing- and fish and chips was about $7 for a huge portion at the venue, compared to what probably would cost $20-25 anywhere else. You must schedule a work trip there in January! :D. I went to college in NYC and played tennis (div. III). Our home court was the National Tennis Center so it was awesome! I used to go to the US open each summer when I lived in NY, a lot of times for free as I taught tennis for NYC Parks and Recreation in the summers. Never been to the French Open and Wimbledon, but definitely on my bucket list.
Very cool! I’m thinking of doing our annual new year business kick off in Melbourne in January for sure! Then maybe the Maldives.
Very cool you got free tickets to the Open. I’m excited that you have never been to the French and Wimbledon. The venues are terrific. But in the French Open is more entertaining because the rallies last longer.
Great pics! Glad you had an awesome trip. Vacation is one thing I tend to splurge on. If I’m going to spend money, I like to spend it on experiences more than material things. I think the joy and reward last longer.
The pic of that french toast is making me hungry!
I loved this article and a several times overspent on Vacation. The easiest way I have found to save money when traveling with a group or family is renting a house/condo. When you rent houses you have the flexibility to control food and alcohol costs. You can save a fortune by having a glass of wine or cocktail before dinner. I also found if you want to eat at a nice restaurant lunch is 30 to 40% cheaper with the same excellent service and food. Also you tend to drink significantly less at lunch then dinner, and alcohol at expensive restaurant can be 50+% of your bill.
A couple of article ideas for your travel blog would be to compare VRBO vs. Airbnb. I have used both and find each side has pluses and minuses, but never spent the time to research each site. Another article would be to give tips on renting from these sites. My mother and father love to rent houses for travel, and here are some of her recommendations. 1. If the first picture is a pool don’t rent. 2. Look at the artwork on the wall if there aren’t any or look cheap don’t rent. 3. Read all the recommendations, but take the negatives with a grain of salt. 4. If the first picture is of the beach be very cautious. 5. Really focus on the kitchen if they maintain the place it will have all of the amenities you need to cook. Would love other suggestions! Keep writing I always find something I can use in my life with every blog!!
Sounds good Robert. Thanks for the new article suggestions. I’ve been meaning to write about Airbnb for a while, especially since Airbnb is based right here in San Francisco. I may very well do that for a couple of my bedrooms in my existing house to see what it’s all about and to see if I can meet any cool people and learn some cool strategies to make extra income on the side. For some reason, I’ve been reticent and letting strangers into my house more then into my car.
But maybe I can be very picky in who I can let in. Renting out my house for two weeks while I was in Europe would’ve been great, but then what if they wrecked the house!
Wow, how one can only take 4 days off from their job is insane. I get 20 days and that’s right…I use all 20! Sometimes I even go negative and owe vacation days ;) Funny thing though, I still often do my own personal work (i.e. blogging, investing, a side hustle) on my days off because it doesn’t feel quite the same as working in a corporate office. I’m sure you get what I mean since you’re blogging on vacation. Great pics by the way!
I did a 6 month vacation in Europe when I got out of one job, before I wanted to hop to the next one. I saved up for a long time and constantly planned everything I wanted to do. Paris was the one place I had any regrets going to. I like the museums and the tourist spots. But I had a hell of a time trying to find places to eat that weren’t American chain restaurants. It was annoying. But the bakeries everywhere where very quaint and fattening. :)
Falling into the vacation money crunch is common. My wife and I find ourselves back and forth between the “we’ll only be here once” and “but let’s not blow the entire budget on one dinner!” I like your give and take with meals though, we do this quite often as well. If we can find a hotel that includes breakfast, perfect. Then we’ll have more to spend for dinner (if we choose, not that we have to spend more). This post really hits home for so many as the summer vacation season is upon us. Great read!
Wow, just wow at those prices. Thank you for the pricing detail. I wondered about actual costs. Now I know that if I did a full European tour, the costs would financially break me.
It’s truly out of reach for the time being. One day maybe.
I think the number one reason people spend more on vacation is convenience. The entire point of a vacation is to relax and for most W-2 employees, they are only visiting for a few days. Finding the best deal on the spot is the opposite of relaxing as you spend energy looking for and weighing your options. You can maybe get away with that if you’re traveling by yourself but two or more people and it goes sour quickly.
The way I combat this is planning everything upfront including where you’re going to eat. At the very least you know what to expect when you get there and all the decisions have already been made.
When I travel alone, I am more spartan and happy to walk very long distances. When I travel with my girlfriend, the memory is more important than the money saved. We have not been extravagant, and have each other for entertainment. We also pre-pay as much as we can and pay attention to menus when making reservations. I email us a list of other restaurants in case she just does not want the best flounder in the world etc. I prepare us really well. Then we sail smoothly through. And I get to see her smile in a new part of the world.
Sounds like a great trip. I still remember watching the US Open while training in New York for my first job.
We are the same way about spending money on vacation. We went to Las Vegas last year – stayed in an 1800 sq foot room at the Four Seasons, took the kids to dinner at Le Cirque, and watched O from a luxury box. It was seriously ridiculous.
Another way I look at it. Similar to the Tim Ferriss slow carb diet, take one day per week to eat whatever you want. It keeps the cravings from overtaking you.
The same with spending. Most of our vacations are funded using airline points and staying at our family’s place in Florida. It’s great and nearly free.
We budget for a trip like the Las Vegas one once every year. And it is something we all look forward to. We use it as motivation to keep the rest of our spending in control the rest of the year.
Wow, how much did a 1,800sqft suite at the Four Seasons cost? that is big balling slacker!
I am far from a baller!
If I remember, the suite was $900 per night, but we never pay full price. We are pretty good at negotiating discounts and had booked something much, much less expensive and got this suite instead.
Also, at the time, our company was spending lots of money there as we hosted an annual conference at the hotel.
Actually, that’s one of the great things about Las Vegas. It is quite a bit less expensive than many other bigger cities. And they’re always willing to make a deal with you.
It is amazing to see budgets fall by the wayside. I took a trip to D.C. last year and I had planned $1,000. But then this came up, and that came up, and this festival is going on and $1,000 turned into $1,200. I rationalized it because I figured, we’re already here and the experiences will be awesome.
Then I got home and started logging the budget and realized my 20% overage. I had great fun and for $200 extra, it was probably worth it. But the bean counter in me cringed.
Overspending on vacation is easily done and certainly something we have done in the past. These days we are more likely to have a good idea what the whole vacation will cost us, not just flights and hotels, but food, entertainment etc. this is then the expected budget for the vacation.
We tend to plan some meals in advance, use Yelp and Google to find non-touristy places, and only spend on hotel food when there isn’t any other choice. But on top of that we’ll plan and budget for a ‘big’ special meal too
Hmmm . . . . I was in Paris not that long ago. We ate at bakeries for breakfast and always ordered those great pre-fix specials for dinner and didn’t pay close to what you ended up paying for food. We stayed away from the Champs D’Elysee and other upscale tourist areas and ate off the main drags.
On the other hand, I just came back from Big Island Hawaii – Kona Coast – and the restaurant prices I found were more than in France. We tried to economize by buying groceries but they were extremely expensive!
Grocery costs in Hawaii are the highest b/c everything is imported.
Clearly, you did not have dinner at La Fouquet’s! :) Did you eat at Laduree for dessert? Amazing.
Getting a little grey under the hat there Sam, you sure your not 40 yet? ;-)
Hah! As I zoom in, my hair does look grey doesn’t it? I assure you, there’s not one gray hair on this 39 year old head. It’s the luxurious shine after taking an Evian shower with enriched minerals!
Now if the readers start stressing me out… well. But I have found since leaving work in 2012 my stress level has gone way down.
I feel you on this one. We are taking a spur of the moment trip to Hawaii next month so everything is being paid for out-of-pocket. So far we have the flights and hotel covered. I have budgeted $150 per day for food and etc. The mark-up would be north of $250. Let’s hope it doesn’t come to that! Either way, I plan on enjoying myself.
I usually only travel for business (other than spending time with DH’s family, but they live in a rural area where the only place to buy anything is Walmart). Since I don’t own the business and since the money goes away at the end of each year if I don’t spend it, it doesn’t affect me much. There are limits to how much I can spend per meal, but I don’t generally hit them.
It’s so much easier to spend on vacation especially when you’re staying at a fancy hotel. I suppose that’s when status comes in handy. At Marriott you get free complimentary breakfast once you reach gold status. At $30+ per person for breakfast, that can quickly add up. When I am on personal vacation, I usually stay pretty frugal and pick the cheaper places for food and such. But you’re right, when on business travel, expenses wouldn’t be on the top of my mind.
Hi Sam,
#6- You get a break from stealth wealth!
Yeah! Good point! Need a release valve to live it up sometimes right?
80 – 90% of the world is really cheap to travel in. If you stay in those countries, you don’t need to worry too much about spending or budgeting. Outside of western Europe, Australia, North America, Japan, some Caribbean islands, and the odd luxury island like Maldives, the rest of the world is surprisingly affordable.
Not too many people would want to travel to the other 80-90% of the world though.
lol at the free bread picture caption…..sure it’s free. But I agree, we should be financially responsible and on vacation live a little! It’s also important to pick and choose when to splurge. If we splurge all the time on vacation (i.e. fancy bfast lunch and dinner every day), then we won’t savor it as much. Another way to control spending is to research restaurants and attractions before your vacation to get the best value and also help to spend time wisely.