Americans are often supposed to be too hard-working. Half of the workers do not use all the vacation days they have. According to NerdWallet research, we prefer getaways, but before it, we should plan our long-term finances.
Nowadays more than 63% of Americans want to go on vacation in the following half a year. In 2009, this figure was 33%. That year was a year of Great Recession, but it shows us anyway how far we are from this point.
Skipping the relaxation seems to be boring, but some data show that your overall happiness increases afterward. Studies, conducted in the U.S., Norway, Spain, and Ireland show that it gives contentment to old people to understand their financial stability for the lease of life. Another study, conducted in the U.S., shows that lowering of debt level and expanding of assets results into greater contempt from life.
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Adults, irrespective of their age or income, should have an emergency fund. This fund should be enough for living at least three months, or ideally six months. The fact is that the majority of Americans have less than $1 000. That is why it is a trouble for them to go on a vacation.
But, saving for the future does not mean you have to deprive of the vacations at all. Have you recently paid your monthly fee into the retirement account? You do not want to touch your emergency funds? Then you are probably one of those Americans, who choose to apply to small money loans online or using a credit card.
Vacation and Budget Planning
Near 37% of families feel satisfaction from holidays and over the last few years Americans have started using more vacation days, so saving money for a trip is a priority for many. But when asked about their financial goals for the next ten years, 31% answered they spared money to have a vacation. Only 28% replied that their main goal was to start or increase retirement savings.
According to that NerdWallet survey, 71% of Americans confess that they manage their money in the wrong way. So it is not surprising, that we mostly do not think about our money in broader terms. Out of that 71%, 48% say they have to start thinking about it sooner, and 39% admitted that they spend money on the things they did not need. About 32% regret not controlling their budget.
But everything is not that bad. 89% informed that they have financial targets for the next ten years and 88% said they take measures to manage their finances better. But some Americans still do not see the reason to spare money. Many workers think that Social Security will be enough for their retirement period. Although the majority needs to save 70% of finances they owe to have a dignified old age.
Use cash in a smart way
For sure, it is hard to give up on traveling in order to be able to retire in 25 or 30 years. Though your holiday might not seem a very obvious bad money habit, you should realize: if you spend too much on vacations, your calm retired years can turn into empty pockets.
Let us imagine you want to go for a vacation worth $2 000 this year. It seems it will not decrease your retirement. But you can invest this money over the period of 30 years and get 7% annual return. Then your starting sum will turn into $15 000. Even more, if you put these $2 000 into a retirement account, they can become $189 000 if you get the same 7% annual return.
So when you have good times, you do not think about how to make your retirement well-off. But if you splurge on costly trips, you will have problems down the line. Put away $2 000 every year and live in comfort when you are old.