Last updated in November 2020
Are you trying to decide whether to spend money on travelling or save money? The question can be difficult to answer and everyone knows the guilt that follows booking a holiday when you cannot really afford it.
But travelling is important for your mental health. And let us be honest, life would be boring without it. This post will help you decide whether you should book that hotel or spend your next holiday in your garden.
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Table of Contents
Should you spend money on travelling or save money?
Do you have an emergency fund?
An emergency fund is a fund that will cover you if you find yourself in a position in which you urgently need money. For example, if you are made redundant, have an accident, or a leaking roof. It is generally recommended to have an emergency fund of around three to six times your monthly living expenses.
If you do not have an emergency fund, or have less than three month’s worth of living expenses in it, you should not go travelling. Travel always comes with risk. For example, you may break your arm while skiing, miss your flight, get food poisoning, etc. Sometimes you may just accidentally spend more than you had planned.
Therefore, going on a trip without an emergency fund is dangerous. You will feel so much safer with some extra cash in your bank account. This means you can enjoy your holiday much more.
Do not go travelling unless you have three to six times your living expenses saved up in addition to the money you need for your travel.
Do you have retirement savings?
After having an emergency fund, you should consider your retirement savings. If you are still very young, retirement may not be a priority right now but having some savings is important. You probably do not want to rely on the state pension which may not even exist anymore when you retire.
Find out how much retirement savings you should have at your age. Chances are that you do not have enough as most people lack adequate retirement savings. But do not worry if your pension pot is too small, you can still go travelling.
Just because you need to save for your pension you should note deprive yourself. But it is a factor to consider when choosing how much to spend on travel. If you have a lot of catching up to do, you may want to use a budget airline over a first-class flight, etc.
Do you need other savings?
Think about the future and what expenses you may have. For example, if you are about to start university, you may need some savings to see you through. Equally, if you want to have a big wedding in the near future, or perhaps would like a child, you may need additional savings.
The benefits of saving money
Assuming you have an emergency fund and retirement savings, should you still save money or can you go travelling? Saving money over travelling has many benefits, including:
- You are more prepared for your future. If anything comes up that you wish to buy, you have the money ready.
- In the future, your savings could help you finance big life events such as a wedding or buying a house.
- You can become financially independent earlier. Then, when you have enough money to live off your investments, you could spend the rest of your life travelling.
The benefits of travelling
On the other hand, travelling also brings a number of benefits with it, which include:
- You can become more independent which will help you later in life.
- Experiencing other cultures can make you more open minded.
- You could even learn new languages or network with other people which could help your career.
- Travelling also allows you to relax, meaning you could produce better results at work.
- It also improves your mental health.
Overall, travelling can help you grow as a person, especially when you are still young. This can translate into future financial gains.
Saving versus travelling
Both saving money and travelling have advantages. It is also obvious that either using 100% of your money for saving or using 100% of your money for travelling does not yield the best results.
You will either miss out on the benefits of travelling or live a dangerous life without savings. Having money is arguably more important than going travelling though. This is because you need food and shelter to survive but you do not need to travel.
However, to live a fullfilled life and become a better person, travelling is mandatory for most people. Thus, it is worth investing some money in yourself and use it to travel. Just make sure you have an emergency fund first.
Saving money while travelling
Saving money while travelling is the ultimate answer to the question of whether you should spend money on travelling or save money. This may not be doable for everyone but is an attractive option for those who can. There are travel hacks that help you cut down the cost of travelling, especially when you are staying in Europe.
You can also make money while travelling. Remote jobs are a good way of combining travelling and working. Another possibility is making travel your job and teach English as a foreign language.
Anyone can become a qualified teacher within a couple of months. This does not require a university degree. All you need is a Teaching English as a Foreign Language (TEFL) certificate. For a small upfront cost, you can get paid to see the world.
Should you spend money on travelling or save money? summary
In summary, the answer to the question whether you should spend money on travelling or save money is not straightforward. It depends on how much savings you have and what your future plans are.
Travelling is definitely important for your development and can open new doors. The balance between saving and travelling is important and you can get an edge by saving money while travelling.
You may also be interested in finding out whether increasing your income or reducing your expenses is the more effective way to create savings.
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