Trying to cut back on spending is never easy, and it becomes even more difficult if all you want to do this summer is go on a summer vacation. As travel has grown more expensive, ongoing economic uncertainty means some Americans may be reconsidering their priorities: spend their hard-earned money on a vacation or reserve it for emergency savings?

Bankrate has found that Americans are typically choosing to spend money on travel, even when their emergency fund is low.

Slightly less than half (44 percent) of U.S. adults who have traveled or anticipate taking a leisure trip this year have spent, or plan to spend, at least $1,000, according to a June 2023 Bankrate survey. Simultaneously, 52 percent of U.S. adults have less than three months’ expenses in emergency savings, according to a separate June 2023 Bankrate survey. That includes 22 percent of people who have no emergency savings at all.

Spending money on a vacation isn’t inherently irresponsible, but spending money instead of putting it aside in savings can sometimes cause guilt. Although building your emergency fund is a top priority during economic uncertainty, that doesn’t mean you have to sacrifice discretionary spending or vacations. By considering what’s important to you and taking stock of your budget, you can save for the future and enjoy your time now.

If you don’t have enough emergency savings, your next unexpected expense could push you into this pricey debt cycle. There might be a happy medium: Could you still travel somewhere, but on a tighter budget? Using rewards points and miles can stretch your dollar a lot further. — Ted Rossman, Bankrate’s senior industry analyst

Key Bankrate insights on travel expenses and emergency savings

  • Leisure travel is only growing more popular since last year. 63% of U.S. adults have traveled or plan to travel for leisure in 2023, up from 58% of U.S. adults who planned to travel for leisure or already had traveled by June 2022.
  • People also plan to spend more since last year. 28% of leisure travelers plan to spend more in 2023 than they did in 2022.
  • Cost is the factor most frequently stopping people from traveling. 58% of those not taking a summer vacation this year say they can’t afford it, up from 48% in 2022.
  • Emergency savings have been stagnant since inflation began rising. 52% of U.S. adults say they don’t have enough emergency savings to cover at least three months’ worth of expenses, similar to the 51% of U.S. adults who say they didn’t have enough emergency savings to cover at least three months’ worth of expenses in 2022.
  • Discomfort over emergency savings is common. 57% of U.S. adults feel uncomfortable about their current level of emergency savings.

Amid higher-than-usual prices, slightly less than half of travelers plan to spend at least $1,000 on travel expenses

Two in three (63 percent) U.S. adults have traveled or plan to travel for leisure this year, according to Bankrate. After COVID-19-related travel restrictions ended, more people have begun feeling comfortable flying again. On July 20, 2023 alone, the U.S. Transportation Security Administration screened 2.74 million travelers, up from 2.7 million that same day in 2019, before the beginning of COVID-19.

Crowds aren’t the only headache travelers are facing — they’re facing sticker shock, too. Inflation has impacted the cost of airfare, gasoline, food and other common travel expenses, and 53 percent of those who have already traveled in 2023 are seeing higher prices than they’re used to, according to Bankrate.

Just under half (44 percent) of U.S. adults traveling in 2023 expect to spend at least $1,000, and most will try to stretch that money as far as they can: 80 percent of summer vacationers told Bankrate in April 2023 that they planned to change something about their vacation due to inflation:

  • 29 percent planned to select less expensive accommodations and/or destinations.
  • 28 percent planned to engage in cheaper activities.
  • 26 percent planned to drive instead of fly to their destination.
  • 26 percent planned to travel for fewer days.

Despite the moves to cut costs, rising prices may mean people spend the same, or even more, on their vacation. Roughly one in four (28 percent) leisure travelers expect to spend more this year than they did in 2022, according to Bankrate.

Older Americans are most likely to spend thousands on travel

Only 58 percent of baby boomers and 60 percent of Gen Xers plan to travel this year, compared to 69 percent of millennials and 68 percent of Gen Zers. But baby boomer and Gen X travelers, who may have more disposable income and more time to travel, are spending far more.

Half (50 percent) of Gen X and baby boomer travelers will spend at least $1,000 on travel this year:

Source: Bankrate survey, June 6-9, 2023

Note: Additional options were present in the survey question but are not shown here.

Younger Americans are less likely to spend as much on travel. Only 31 percent of Gen Z travelers plan to spend at least $1,000 on travel this year, the smallest percentage of any generation.

Over half of Americans have less than three months’ expenses in emergency savings

Building an emergency fund can be a lifesaver if you lose your job or have an unplanned expense. Bankrate experts commonly recommend saving three months of expenses to prepare for the worst.

While 52 percent of Americans have less than three months’ expenses saved, the tendency to have those funds increases as Americans age.

Baby boomers, who have had more time to contribute to their savings and watch it grow, are the most likely generation to have at least three months’ expenses saved. Nearly two in three (65 percent) baby boomers have at least three months’ expenses in emergency savings:

We asked: How much do you have in emergency savings — that is, money that is readily available in either a checking account, savings account, or money market?

Amount of emergency savings Gen Z (ages 18-26) Millennials (ages 27-42) Gen X (ages 43-58) Baby boomers (ages 59-77)
No emergency savings 31% 27% 22% 15%
Some, but less than would cover three months’ expenses 41% 32% 35% 20%
Three to five months’ expenses 16% 20% 16% 18%
Enough to cover six months’ expenses or more 13% 21% 26% 47%

Source: Bankrate survey, May 19-22, 2023

In comparison, only 29 percent of Gen Zers, who are likely much newer to the workforce, have enough emergency savings to cover at least three months’ expenses.

Regardless of how much you have saved, if you haven’t gone on a vacation since before COVID-19, it can be tempting to go all out on a trip. But Bankrate Senior Industry Analyst Ted Rossman advises against spending money you don’t have.

“I don’t want to tell people they can’t have any fun, but it is worth pointing out that the average credit card rates are much higher than most other financial products. Financing a vacation with a credit card is a risky and expensive proposition,” Rossman said.

Instead of going into debt or using emergency savings, Rossman suggests the happy medium of traveling on a tighter budget, or forgoing travel altogether in favor of a staycation.

“Consider driving instead of flying,” Rossman said. “Or visiting a place during its offseason or shoulder season. I also like the idea of letting the deal dictate when and where you go. So often, people get their hearts set on a specific place at a specific time, and that makes it harder to save.”

A personalized budget can help you build both your emergency fund and savings for vacation

Daniella Flores knows the pain of trying to balance saving and travel in their budget.

Flores, a freelance writer and founder of finance and side hustle blog I Like To Dabble, at one point carried $40,000 of student loan and medical debt, which made it difficult to simultaneously prioritize debt repayment, savings and living their everyday life.

What helped for Flores was creating a personalized budget with their wife — ignoring common suggestions like the 50/30/20 model — to instead allocate funds to what was important to them. In this case, what was important was both debt repayment and travel.

“For someone else, let’s say they do have a lot of debt, but they don’t want to prioritize [paying that off] yet, because maybe it’s low interest, and they want to prioritize something else, that’s totally fine,” Flores said.

Flores has attention-deficit hyperactivity disorder, or ADHD, which for many people includes symptoms like impulsivity and difficulty with fine details. Flores and their wife tried to use spreadsheets to create a budget and tackle their debt, but didn’t find it useful.

Instead, Flores used budgeting techniques that worked for them, which includes automatic savings, bucket budgeting and choosing a credit union that would lay their budget out visually on its website. They budget for retirement and savings, but also for vacations. Instead of trying to cut out impulse spending altogether, they allocate a small amount of money each month for impulse spending.

“I had a lot of guilt before, when I was first trying to get my finances together,” Flores said. “My therapist did say … ‘A miserable life will come from sitting there and thinking about all the things you should do, rather than the things that are really for you, that you find out on your own.'”

That means, though it may not be the thriftiest option, Flores will budget money to get coffee and small treats while they’re out, or to buy paper books rather than cheaper e-books. They find they spend much less on impulse purchases that way.

But even if someone does spend more than they budgeted, that’s not a reason to feel guilty, Flores said.

“It’s finding a good balance, I think,” Flores said, “to not drown in the guilt, because it’s not like you did something wrong. You made maybe a little misstep, and then you can look at that, correct it for next time. Then slowly, these little habits add up. It’s not going to happen in a day, or in a couple of weeks.”

4 steps when budgeting for travel expenses while also trying to build savings

Just because you have a tight budget doesn’t mean you can’t spend money on a vacation. Like any other large purchase, careful planning and research can save you money when traveling. Try starting with these tips:

  1. Start ahead of time. The sooner you make a budget for your trip, the better prepared you’ll be. Start looking for travel dates a few months in advance to make it easier to ask for time off work and begin keeping an eye out for deals. Popular budgeting apps like Expensify and PocketGuard can help you make a travel budget before your trip. If you feel like you can’t make a trip work this summer, start brainstorming plans for later this year — or even next year’s summer vacation.
  2. Know your resources. Do you have a travel credit card with unused points? Are your airline miles gathering dust? Nearly half (47 percent) of U.S. adults have at least one unused gift card, according to Bankrate, so check to see if you have any unused cash you can use for your upcoming trip. 
  3. Make rising interest rates work for you. As you plan for your upcoming trip, consider saving ahead of time with a high-yield savings account. Interest rates are at a 22-year high, which means interest rates on savings accounts are higher, too. Saving ahead of time allows your savings more time to accrue interest and can lessen the budget hit when you leave for your trip.
  4. Be open to throwing your plans away. Flexibility is the ultimate key to saving money on travel. Keep an eye on prices in the weeks leading up to your trip for flight deals and consider weekdays or the off-season to fly out, when fares are cheaper. Travel hacking tips like earning rewards on shopping portals or dining rewards programs can allow you to save even more. Credit card points and miles are also a great way to save money on upcoming travel if you have the flexibility to plan your vacation around rewards.
  • Bankrate commissioned YouGov Plc to conduct the survey on travel woes. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,689 U.S. adults. Fieldwork was undertaken June 6-9, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

    Bankrate commissioned YouGov Plc to conduct the survey on summer vacation plans. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,461 U.S. adults, among whom 1,554 are likely to take at least one summer vacation this year. Fieldwork was undertaken on March 29-31, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

    The study on emergency savings (that was conducted in May 2023) was conducted by SSRS on its Opinion Panel Omnibus platform. The SSRS Opinion Panel Omnibus is a national, twice-per-month, probability-based survey. Data collection was conducted from May 19 – May 22, 2023 among a sample of 1025 respondents. The survey was conducted via web (n=995) and telephone (n=30) and administered in English (n=1000) and Spanish (n=25). The margin of error for total respondents is +/- 3.4 percentage points at the 95% confidence level. All SSRS Opinion Panel Omnibus data are weighted to represent the target population of U.S. adults ages 18 or older.