Dreaming of a summer holiday? Set your budget.
Wondering how much you should be spending on travel every year? We’ve got guardrails you can stay within.The temptation to splurge on a summer holiday after a long winter is real. But, budgeting best-practice says you should keep your total travel costs for the entire year below 15 per cent of your after-tax income; that's your net pay or what's deposited into your bank account after you've paid taxes and deductions for things like CPP and EI. Here's what you should include in the travel category within your budget:
Car payments
Vehicle maintenance
Fuel
Insurance
Bus and transit passes
Taxis
Car share programs
Vacations (includes plane tickets, hotels, resort fees, car rentals, travel insurance, etc.)
Let’s say your household take-home income is $60,000 annually. That means your annual travel budget shouldn’t exceed much more than $9,000, which is 15 per cent of $60,000. So, if you're following budgeting best-practice, your allocations could break down as follows:
Annual
Monthly
After-tax income
$60,000
$5,000
Car payments
$3,700
$308
Vehicle maintenance
$600
$50
Fuel
$1,300
$108
Insurance
$1,000
$83
Bus and transit passes
$500
$42
Taxis
$150
$13
Car share programs
$200
$17
Vacations (plane tickets, hotels, resort fees, car rentals, travel insurance, etc.)
$1,800
$150
Total
$9,250
$771
% of your after-tax income spent on travel
15%
15%
Take a moment and calculate your travel budget allocations to determine what you can afford to spend on vacations. If the amount isn’t sufficient to have the kind of vacation you really want, you may need to cut back in other areas of your travel spending, or boost your income.Need a hand calculating your travel budget? No problem. Download our free MeVest Travel Cost Calculator. Curious about what your total budget breakdown should be for all of your spending? Follow these guardrails.
Retirement saving 15%
Emergency saving 5%
Housing (includes utilities) 35%
Groceries and supplies 20%
Travel 15%
Entertainment / Other 10%
Have a financial question or topic suggestion for our eNewsletter? Our team would love to hear from you! Submit your financial questions today by emailing us info@mevest.ca