Summer travel season is here, and for many families, that means booking flights, planning itineraries and deciding how much to spend on the trip. According to Jeffrey Fratarcangeli, founder and CEO of Fratarcangeli Wealth Management, vacation spending does not have to compete with long-term financial goals, but it does need to be planned for like any other major expense.
“You should put yourself on a budget, but then look at the experience you want to have and balance it out,” Fratarcangeli said.
Below are four insights Fratarcangeli shares with clients as they plan for summer travel.
Treat vacation as a variable expense, not an afterthought
Fratarcangeli typically recommends that his clients start by separating fixed expenses from variable ones. Vacations fall into the variable expense category, alongside things like home improvements or a move, because their timing and cost are inconsistent year-to-year.
“Family vacation may be more consistent of an event, but what you do and what you spend will likely be different each time,” he said.
That distinction matters for planning purposes. A fixed expense is predictable and is automatically built into a budget. A variable expense, like travel, requires more intentional planning, because the cost can shift significantly depending on the destination, timing or length of the trip.
Vacation funds should be set aside, not pulled from investments
Money earmarked for summer travel should already be set aside, not drawn from long-term investment accounts when the trip comes up.
“You should not be relying on your investments to fund your family vacation,” Fratarcnageli emphasized.
He noted there can be flexibility if a portfolio is performing well and an investor chooses to raise a little extra cash to add to the vacation budget. But that decision should be made deliberately, not as a last-minute substitute for planning.
Plan for the higher cost, then prepare to scale back if needed
Fratarcangeli’s approach to summer travel budgeting follows a consistent principle he applies across financial planning: plan for the worst-case cost scenario, then adjust as needed.
“I encourage clients to plan as if they will encounter higher costs for their vacations,” he explained. “It is better to end up needing less than what you planned for, rather than needing more than what you have.”
That cushion gives families room to make the trip what they want it to be, without scrambling mid-vacation or pulling from accounts that should stay untouched. If costs come in lower than expected, that is simply a bonus. If they come in higher, the plan already accounted for it.
Balance financial security with the value of family experiences
Fratarcangeli is clear that disciplined budgeting does not mean cutting out the vacation experience itself. Long-term financial security is critical, but so is creating precious memories with family.
For Fratarcangeli, that balance is the real takeaway. A vacation budget, like any other part of a financial plan, works best when it is set ahead of time and weighed against what the family actually values.
“A family vacation can be a happy memory that your child carries for the rest of their life. How can you put a price tag on that?”
For more insight from Jeffrey Fratarcangeli, visit www.fratarcangeliwealth.com.