MW How can I spend $5,000 to $10,000 a year on travel without wrecking my finances?

By Aditi Shrikant

Some MarketWatch readers say they spend about $10,000 a year on travel. We asked financial advisers what the right amount is.

A good rule of thumb is to allocate 5% to 10% of your net income annually to travel after you've met your savings and investment goals.

It's the time of year when a sort of postsummer spending hangover kicks in. I look at just how much money I've sunk into weekend getaways and patio drinks and think: "Who did that? It couldn't have been me."

But, as is the case with every hangover, it is me who made those decisions that now seem so ill-advised.

That's why I could totally relate to the most recent letter writer to my advice column, Dollar Signs, who expressed frustration at how to balance his and his partner's desire to travel with making responsible saving and investing decisions.

"If we go too long without an excursion, we get cranky. Home life gets more difficult. Work performance suffers," he wrote to me. "We want to make sure we experience a good chunk of what the world has to offer in our short time on this planet, but we don't want to fall way behind on our financial goals because of it. Is that even possible, or are we living in fantasyland?"

Who hasn't gotten restless, bought the plane ticket, booked the Airbnb $(ABNB)$ and then been puzzled that they don't have more in savings?

Answering this letter writer's question got me thinking: How much do people actually budget for vacations? That's why I decided to ask you, the MarketWatch readers, in recent Instagram and Twitter posts: How much do you think is appropriate to spend on travel?

Almost one-fifth of the 47 Instagram respondents said $10,000, and about 50% of the 2,832 Twitter respondents said above $5,000.

This is far above what the average American says they allocate to trips. A Deloitte survey from April found that Americans planned to spend $4,606 on travel this year. And even though Americans' sense of financial well-being had declined, more people intended to take vacations this summer than last year: 53% versus 48%, Deloitte found.

This disparity made me wonder if there is a formula for how much you should spend on travel each year - and it turns out there is.

Budgeting for travel should not be an 'afterthought'

A "good rule of thumb is to allocate 5% to 10% of your net income annually to travel" after you've met your savings and investment goals, said Dennis Huergo, a certified financial planner at Wealth Enhancement.

He suggests using the 50/30/20 budgeting rule - 50% of your income goes toward needs, 30% to wants, and 20% to savings and debt repayment - and allocating 5% to 10% within the "wants" funds to travel.

Marc Shaffer, a certified financial planner at Searcy Financial, offered the same guidance: 5% to 10% of your annual net income after you've made other nonnegotiable payments.

"The key is to plan travel as an intentional line item in your budget, not an afterthought," Shaffer said. "If you treat it like a goal and presave for it, you avoid overspending or turning to credit cards later."

So if you want to spend $10,000 a year on vacations, which it seems like a lot of you do, your take-home pay would need to be $200,000. If you earn $100,000, your annual travel budget should be $5,000, according to this formula.

Make your vacation worth it to you

Sometimes, the biggest contributor to my postspending anxiety isn't the amount of money that's gone, but the amount of fun I did not have. If I'm going to shell out any amount of cash, even if it's within my budget, I want it to be on experiences or items that I truly enjoy.

I have definitely fallen into the trap of paying for a $24 martini at a snooty bar because the patio looked cute on Instagram, only to leave feeling cheated and annoyed.

To avoid this pitfall on trips, it might help to look at where exactly your travel budget is going, suggested Kyle Playford, a certified financial planner at Freedom Financial Planners.

Let's say you spent 40% on flights, 30% on an Airbnb, 20% on food and 10% on excursions. Do those purchases align with your interests? Ask yourself, "Of those categories, what did I value most?" Playford said. "Should I spend less on food to get a better Airbnb? Have a trade-off conversation."

Personally, I enjoy an outdoor space but would be satisfied with a well vodka soda, so maybe it's not in my best interest to go somewhere that boasts a storied mixologist. I've never regretted trying a noteworthy restaurant, but I know I can fall asleep pretty much anywhere, so a nice hotel wouldn't be worth it to me.

In the same vein, if you know you're not a fussy flyer, maybe don't spend extra money on flight upgrades. Extra legroom and a wider seat might be nice, but so is having more money to enjoy the actual destination.

By sticking to this CFP-approved formula for travel budgeting, and being intentional with where exactly your "fun" funds are going, perhaps we can all come out of the summer feeling a little better about how much money we spent - or at least valuing the memories it made possible.

If you're just starting out on your money or career journey and have questions about how to navigate your finances, we want to hear from you. Write to Dollar Signs, MarketWatch's new advice column, at dollarsigns@marketwatch.com.

-Aditi Shrikant

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August 25, 2025 15:17 ET (19:17 GMT)

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