Most millennials like to travel and explore new places. Social media inspires people more than ever to travel. Should most people just live for the moment and travel regardless of the cost? I’m a big proponent for living within your means. That means not eating fancy meals or going for expensive drinks if you are paying off student loans. It’s important to save money for your essentials before considering traveling. Here is some financial advice for the millennial traveller.
Use points and miles to minimize travel costs.
I’ve spent very little money in airline flights and hotel costs by using a variety of different hotel points and airline miles. For example in 2014, I spent about $1,000 to travel to Hong Kong, Bora Bora, Maui, and New York City for two people. My goal is usually trying to pay as little cash as possible for the big expenses.
Using cards like the Chase Sapphire Preferred or Reserve for flights and finding cheap AirBnB lodging and paying it off with a Barclaycard Arrival, you can have airfare and lodging covered.
Do free activities while traveling
The average millennial traveler isn’t looking for luxury hotels and activities. Most enjoy going on hikes and visiting beaches. My last trip to Hawaii, we spent most of our time hiking, driving, and going to the beach. Having a picnic at the beach also saves quite a bit of money instead of eating at restaurants all the time. These activities don’t cost much, except paying for gas, but you can collect points and use Plenti points for free gas.
Do free walking tours in some major cities to learn some history. We had a great free tour in Prague with (of course you should tip).
Obtain freebies from Credit Cards
Obtain Elite status from hotels and eat a big breakfast/brunch. The AMEX Surpass or Citi Hilton Reserve have give you automatic Hilton Gold status. If you have Hilton Gold, or stay at a hotel with free breakfast, I would eat a bit later so you can just skip lunch or eat a small snack. Another cheapo idea would be bringing a Ziploc bag and making a sandwich. In Europe, they often have deli meats and bread for breakfast and that makes a perfect sandwich.
Use your money saved for travel to invest in your future.
Although I blog mostly about points and miles, I actually am also passionate about investing and saving. If you are using points and miles, you should take that money you would have had for a travel fund and pay off your student loans, or other high-interest debt. If you don’t have high interest debt, invest in retirement early and as often as possible. Actually, if you have high interest debt, you probably shouldn’t be traveling and applying for credit cards. My basic philosophy in investing is as follows:
- Invest in your 401K up to your employer match. You don’t want to miss out on free money if your employer matches.
- Save at least 3 months of monthly expenses as emergency funds in a 1% savings bank such as Ally Bank or Discover Bank.
- Invest in a Roth Ira with a company such as Vanguard up to the limit. Your Roth Ira can be used as an emergency fund because you can pull the principal out at anytime, but not the earnings.
- Max out your 401K.
- Invest in a taxable account or 529 plan if you have kids. Or pay extra principal on your mortgage. There are several arguments for both, but I think a combination of both may be a good idea. Note: I am not a financial advisor, so take this advice with a grain of salt.
In terms of asset allocation, it depends on your age and that is a whole other topic and there are many other blogs and books about that. The point is that points and miles should save you money to travel financially smart and give you opportunities to save money and invest. Many millennials should be saving more towards retirement. Are you spending your money and living for the moment instead of saving for the future? If you are a millennial and like to travel, I would recommend using points and miles to travel and use the money you save towards investing for your future.