No Summer Vacation This Year? What to Do with the Money You’ve Saved

Maybe that trip to Hawaii you dreamed about didn’t happen, but look at the bright side: You have a nice little windfall to plan for.

Man in an inner tube in the bathtub at home.
(Image credit: Getty Images)

From spring through summer this year, we’ve seen travel get disrupted by COVID-19. Some countries have even banned international travel to help contain the virus.

Clients at my firm who began planning dream vacations many months ago have been asking us for suggestions: What should they do with the cash they saved up for these trips that they’ve had to cancel? It’s a good question, considering the potential amounts we’re talking about. A typical one-week Disney vacation for a family of four costs an average of $6,716, and a two-week European trip costs about an average of $4,000 per person, according to financial site SpendMeNot.

Here are five options to consider implementing with your saved funds. No one is better than the other, and you have to rank these for your own situation. No shame in doing more than one!

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Option 1: Stash That Cash (But Treat Yourself, Too)

Place most of the money you were going to spend on a trip this year into a safer interest-bearing account — and use the rest to enjoy your time off with a staycation. Treat yourself to something nice to make this a little more fun.

Here are a couple of staycation ideas that you can spend some of your vacation money on:

  • Eat like you’re on vacation. Instead of having the same old sandwiches and salads, splurge on some of your favorite foods you’d have while traveling.
  • Splurge on patio furniture, a fire pit or something else to enjoy outside on your time off.

Option 2: Save It All Now So You Can Go Big Later

Don’t feel the need to treat yourself? Consider not spending any of this year’s vacation money, and you’ll have that much more for your next vacation.

Carve the money out to a savings account, certificate of deposit or other safer option and don’t dip into it until you go on that next trip. An option we use with our clients is Flourish Cash, which is a higher-yielding online savings option. While interest rates are not great right now, the idea is to have certainty that the money will be there and does not get commingled with your normal everyday spending account. Have discipline, and your next trip will already be paid for.

Option 3: Get Out of Debt

If you have debts, use this money to pay them down — especially if these debts are at high rates. Use this opportunity to pay off or significantly reduce debts owed and create some breathing room in your monthly outflows. Reducing debt means more money stays in your hands and less interest paid over time.

We would advise you to prioritize paying off high-interest debts before saving for a vacation. For example, the debts we are referring to are credit cards and consumer loans. Interest rates on these types of debt are typically well above 15% annually. If you have multiple forms of high-interest rate debts, start by aggressively getting rid of the ones with the highest rates and go down the line until they are gone.

Option 4: Time to Tend to That Emergency Fund

It's likely you will get all sorts of answers to what is an adequate emergency fund balance. It depends on factors such as income and job stability and type of employment. Certain professions carry higher risks of losing income than others. Typically you will hear answers such as a minimum of three months of basic living expenses in cash all the way up to 12 months (sometimes beyond). This might just be the year to have enough flexibility to use that vacation money to either start or bulk up an emergency reserve fund. Also, while your industry may have been stable before the pandemic, now would be a good time to reassess and consider whether that is still true. We usually suggest getting an emergency fund in place before considering opening higher-risk investment accounts that have a much longer time horizon.

Option 5: Pump Up Your Retirement Plan(s)

If you’re not fully taking advantage of your retirement accounts in 2020, now may be the opportunity to do so. The best way to grow these accounts is to start early and save often. If you’re missing out on an employer match or you weren’t able to save in prior years, this might be a good breather to catch up. In 2020, those with 401(k)s, 403(b)s and most 457 plans can put up to $19,500 into their accounts — and if you’re 50 or older, you can do up to $26,000. And for Roth IRAs, the limit is $6,000 — or $7,000 if you’re 50 or older.

This year has been far from predictable and challenging globally. The impact of COVID-19 will be with us for a while and we’re all itching to travel and get out. While the lockdowns have thrown a wrench in things, a canceled summer vacation presents some opportunities that you can take advantage of. You’ll greatly appreciate having implemented some of these options when looking back in a year or two.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Brian Spinelli, CFP®, AIF®
Co-Chief Investment Officer, Halbert Hargrove

Brian Spinelli is based in Halbert Hargrove’s Orange County and Long Beach offices. His responsibilities encompass running the firm’s investment committee as well as advising individuals and institutions on their investment and wealth advisory needs. Brian was named to HH’s management team in 2012. He earned his Bachelor of Arts in Business Administration – Finance from Loyola Marymount University in 2002 and his MBA from LMU in 2005. He is a CERTIFIED FINANCIAL PLANNER™ professional. Halbert Hargrove is the creator of LifePhase Investing and headquartered in Long Beach, Calif.