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Tips on How to Travel & Save Money During Inflationary Times
Updated: Feb 19
Economic Data
Inflation rose to 8.6% in May 2022, the highest since 1981; the estimate was 8.3%. Inflation will continue to be a contributing factor in the foreseeable future. While summer is here and winter is around the corner, perhaps you want to travel this year after a hiatus because of COVID-19. Savings rates for households increased during this hiatus, and now you, like many others, are willing to spend on travel experiences. But the most significant contributing factor to inflation has come from travel, especially the rise in the price of oil, as this is the primary commodity used by airlines and transportation. According to the Bureau of Labor Statistics, the May 2022 data suggests that the 12-month price change in gasoline, airfare, transportation, and hotel room prices were 48.7%, 37.8%, 19.4%, and 19.3%, respectively. Inflation is hitting everyone, including many vacation budgets. Although elevated prices, many still want to travel at any expense, especially if they were not able to during the COVID-19 hiatus.
I enjoy traveling - if you did not know - I recently took a vacation in May to the Mayan Riviera. More photos of Playa del Carmen & Chichen Itza are on my personal Instagram. Follow me if you want to follow my traveling journey. If you ever cannot think about a destination for leisure, you cannot go wrong with the Mayan Riviera.
So here are some general tips to help you save on your next vacation during inflationary times.
1. Create a Budget Plan
Having a budget is essential in finance, especially during inflationary environments. A financial plan incorporates a budget for your overall finances. A financial plan is like a teaching plan for a teacher, a flight plan for an airline pilot.
When traveling, it is vital to set a budget from your overall financial plan and stick to it. This budget should be for the general vacation and include the essentials such as travel airfare (if flying), gas (if driving), hotel, food, tours, souvenirs, etc. If, for any reason, during the vacation, things were more expensive than expected or increased, then have contingencies in place to see what you can cut back from travel experiences. Of course, you can always purchase travel bundles, but you need to do the math if it makes sense to split up the costs.
For example, renting a car and driving to Chichen Itza was cheaper than using a tour company during my recent travels. Yes, you sacrifice convenience, but having control, such as when you leave to and from the destination, is given back to you, plus you save money.
2. Book in Advance
During inflation, prices rise, and in the current environment, they are rising quickly. If you have been researching travel, you may notice that prices rise after a few days, usually with airfare. If traveling by air, the usual norm is to book at least two months if you're traveling domestically and four to six months in advance for international travel to score a deal.
In recent conversations with a potential client, who also went on vacation in May, they waited until April to purchase their airline tickets. They wanted to score a deal as the time drew near their departure date. Instead, they ended up paying close to double the price.
Airlines and third-party sites have advanced pricing engines in today's advanced technologies. Both know the demand for specific destinations because of their algorithms and other information from data aggregators. Set up alerts with airlines and third-party travel sites for any deals. You may be able to score a deal to your dream destination or discover a different destination.
If you know the destination you would like to go to, research the airports to see which airline flies there. Then compare the prices with the airlines that travel to the destination. You may be able to find budget-friendly airlines that fly to your destination. However, beware of the third-party sites to see which airlines fly to the destination; often, these sites do not carry the budget-friendly airlines. Also, beware of booking through third-party sites, as many of these sites have their own rules and fees should you need to make any modifications or cancellations. Lastly, booking through a third-party site can provide much more headaches as customer service may be lacking and result in constant back and forth.
So, when would you use a third-party site then? If the pricing engine for the airline is pricing the ticket higher than the third-party site. Again, you want to save money and must factor in the cost-benefits of booking through the third-party site.
3. Travel When Others Don't
Demand for travel increases on Fridays and weekends as it is convenient for travelers since it is easier to ask for time off and not disturb their job. Demand also increases during the hours of 8 am through 1 pm. If you have the flexibility, travel when others are not traveling, such as during the week. Also, many flights that leave earlier in the morning or later at night are much cheaper than those during peak travel times. However, you are paying for the convenience factor when traveling during peak hours. Therefore, ask yourself to save a little extra does it need to be convenient?
Also, flights with stops along the route are cheaper than flying directly non-stop. Of course, there are hassles when making a connecting flight, such as the variables of missing the next plane, perhaps lost baggage, or waiting a long time in between flights. But ultimately, you decide on convenience versus the cost-benefits.
Call neighboring hotels within a two- or three-hour drive, ask if there were any last-minute cancellations within the week, and make it a weekday getaway. These short trips can save you more money than if you had a whole week or two-week vacation.
4. Travel Where Others Aren't Going
This next tip is from a client of ours who uses Google Flights (GF) when starting their search for their next vacation. When on GF, place your origin, leave the destination blank, fill in the desired dates, and press search. The results give you a map with prices to anywhere in the world. In addition, you can hover over specific destinations to see the prices. Using this type of search is an excellent start to your search, and you get a reference to the price you will pay for specific destinations.
5. Make It a Road Trip and Flight
In conversation with another of our clients, since they travel to Mexico often, they use the following strategy: a road trip and flight. Finding neighboring airports may be cheaper than flying directly from your origin. This strategy may work well if you are near a bordering country and therefore can fly domestically within the country instead of purchasing an international flight.
For example, one of our clients drives down to the US-Mexican border, which is almost a 2-hour drive. The client then leaves their car in a border parking facility, crosses through into Mexico, then walks to the airport - since it is close to the border. Therefore, they are now flying domestically within Mexico.
6. Make It a Staycation
There is nothing wrong with enjoying the amenities of a hotel at your destination. Some hotels in very tourist destinations offer all-inclusive packages. All-inclusive means everything comes included, including unlimited food and drinks (including alcohol), discounts on tours or vacation experiences, and other amenities but with certain limitations. Always ask for the inclusions and the restrictions if you stay at an all-inclusive resort. Staying within the hotel and enjoying the activities and other amenities may help you save money as you minimize your temptation to purchase other things outside the hotel.
In my recent travels to the Mayan Riviera, I stayed in an all-inclusive resort and did a staycation with my friends. Although we only did one tour to Chichen Itza by car since we went to our vacation destination to enjoy time away from work and unwind.
7. Take Advantage of the Exchange Rates
The last tip, of course, must be related to finance. When there are inflationary times within the US, interest rates rise, creating a stronger US dollar. When the US dollar becomes stronger, other countries' currencies become weaker against it. Your purchasing power increases as you can buy more with the weaker currency. Perhaps your next destination should be in a country that has a weaker currency against the dollar.
When exchanging money, do not exchange it at the airport; the airport rates are the worst. Only exchange in the airport if an emergency arises or in dire need. If staying at a hotel, you should exchange at a local bank or the front desk. You have complete control, do not be afraid to ask around.
Also, do not exchange all the money that you take. As your vacation draws closer to ending, suppose you do have any extra foreign currency. In that case, try to use it all as much as possible because the rate to exchange it back to US dollars is not as convenient.
Finally, do not make the mistake I made after visiting Bali, Indonesia. I forgot to use all the Indonesian Rupiah. I tried to convert back to dollars, but the exchange rate was horrible. When I went to my next destination: Moscow, Russia, I tried to convert to Rubles, but the banks did not accept the Rupiah. Take note that not all banks exchange many currencies. Now the Indonesian Rupiah sit worthless in my travel wallet - you can say they've become a traveling souvenir.
Your Takeaways
Although it is an inflationary environment, you can still enjoy a worthwhile vacation, especially if you took a hiatus from traveling during COVID-19. As always, having a plan, especially a budget, helps you stay on track in anything that deals with finance. Time is your friend when it comes to traveling, and booking in advance will help lower the sting from your budget. Try to be as flexible as possible regarding travel dates and destinations. This flexibility will save money when traveling on low-demand days and to low-demand destinations. There is no shame if you have a staycation once you arrive at your destination. Take advantage of the stronger dollar against weaker currencies, as it will give you higher purchasing power.
So, where are you going on your next vacation? Let us know! We would love to hear from you.
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