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How to spend your vacation fund before the end of the year


If your 2020 had a heavy travel schedule planned prior to the pandemic then, it’s possible you feel lost with what to do with travel credits or a vacation fund that now sits in the bank, untouched. In 2019, Canadians spent an average of $2,573 on vacations, according to a Travel Week report. But this year is proving to be entirely different. In August 2020, MacLean’s reported, “Canadian tourism spending is projected to drop by $42 billion — or 59% — in 2020.”  

If this was going to be the year you visited your dream country, chances are you are sitting on quite a nice pile of change. But, that doesn’t mean you need to feel discouraged. We will travel again – albeit with a lot more restrictions. Until then, it’s essential to make the best possible decision about what to do with your vacation funds. Making these decisions isn’t easy, though, particularly given the current state of our economy. In a recent Zolo Homebase report, 70% of Canadians felt confident about their overall financial knowledge. Yet almost half (46%) failed the basic financial literacy test. So, when it comes to that travel fund, what is the best way to manage your financial loss or gain?

What are the safest travel options?

Enjoying Road Trip Adventures

For most, cancelling 2020 travel plans was a no-brainer; however, most North American shave already started to cancel their 2021 travel plans, also because of COVID. While road trips and short-distance travel are safer options as far as travel goes, they still come with risk. In Canada, some regions, including the northern territories and the east coast provinces are discouraging out-of-province visitors, period. (You can find out more about regional restrictions at Time to Travel. The website offers a real-time map indicating where you can travel within Canada based on where you reside.) 

As far as what the near future looks like for travel, people are getting creative. GAdventures, known for locally-conscious and sustainable tours in most parts of the world, hosted a virtual conference this September. The conference focused on imagining “retravel.” An extensive survey released in partnership with the panel brought back results “indicative of the desire for travellers to get back out and explore the world while feeling confident that their safety is well taken care of.” 

Ultimately, there are ways to travel safely during the pandemic. But that doesn’t mean you should.

What are your options if you have travel credit that soon expires?

Woman wearing mask in office

If you have travel credits set to expire in the next little while, you might be worried that they will be useless. That fear is not baseless, unfortunately. Many airlines issue vouchers instead of offering full refunds on cancelled flights. In these cases, they are looking at their bottom line, not yours. Generally, if your credit expires before you use it, it’s gone. So if you are going to try one of these options, do it before the credit expires.

Ask for a refund

It’s unlikely an airline will issue wholesale refunds. But, if you have an extenuating circumstance, like a health condition that makes you more susceptible to COVID, you may have a case for a refund. It never hurts to ask.

Dispute the charge on your credit card

Technically, if an airline cancelled your flight, you did not receive the service you procured. So, the credit card company may be able to refund the money and block the charge. If you are the one who pulled the plug on the trip, this probably won’t work. But, you may have a case if it was the airline who cancelled. 

If you can’t get a refund for the amount you paid, you still may have some options for the credit:

  • Ask for an extension on the credit’s time limit.
  • Switch the travel credit (that has an expiry date) to points with the airline (which do not expire).
  • Transfer the credit to someone who can use it.

What are some beneficial ways to spend your vacation fund in 2020?

Home makeover and renovation concept

Perhaps you are a diligent saver and had already earmarked some of your earnings for travel before all this. Or, you’re an optimist and socked away some cash in hopes that a winter vacation would work out this year. 

Many places and companies are doing their utmost to keep travellers safe. Hygiene protocols and social distancing are making things cleaner than they probably have ever been. Personally, though, I can’t afford to isolate myself for two weeks following an international trip. Pair that with rising infection rates and fears for my high-risk parents, I won’t be crossing any borders soon. As a travel professional, this a hard pill to swallow. 

Trying to peer into the future to decide when you might feel comfortable taking that dream trip can feel like a futile endeavour. This is especially true when you are sitting at home noticing renovation needs or wondering whether you could use that refund or travel fund to pay off debt. 

If you haven’t yet spent any of your vacation funds because you typically like to take off on a whim, you might be wondering how to spend this cash in a way that still feels exciting. 

Make a robust financial move

Now is a great time to focus on your money. If you have a nest egg, this is the perfect time to make it grow. Take some time to talk to a financial advisor and decide what is best for your situation. There may be some room to pay off a chunk of your mortgage without penalty or put it towards a student loan or consumer debt. Starting with the debt accruing the highest interest is generally an excellent way to go, as putting your money towards interest payments is a lousy use of capital. 

In some cases, like if your debt is at a lower interest rate than what you could potentially make on investments, or if paying off the debt before a set time will incur penalties (as is the case with some mortgages), investing your money is the way to go. Your advisor can help you determine your risk tolerance and provide options for the best ways to invest your money as safely as possible. 

You can also keep your money for a rainy day in an emergency fund or keep adding to your vacation fund for brighter days ahead. As COVID-19 has demonstrated, life is unpredictable. While investing your money will generally yield higher returns, it can require locking it up in a way that means it isn’t readily available when you need it. If keeping your money “liquid” is a concern, make sure you make that clear to your advisor, as it will affect which options are best for you. 

Focus on your home

Conversations with friends and colleagues lead me to believe that I am not alone in my travel hesitation. Since many of us will be spending more time than usual indoors, it seems like spending your travel fund on home renovations or upgrades might be the best use of your money. If you are going to be spending your time at home, might as well make it lovely.

Instead of one or two nights in a hotel in a town not too far away, you can use that couple hundred dollars to make a big impression at home. Renee Medele, the owner at My Favourite Paint, loves the impact paint can make on a home. She suggests colours that echo the feeling you want to evoke in a room. Colours like a smokey blue for a peaceful bedroom suite or a bold, dramatic feature wall in your entertaining space. Painting your front door a bright colour instantly conveys a cheerful welcome and can up the curb appeal substantially. 

In the four-digit price bracket, there are lots of things you can do. Look at upgrading your flooring. The laminate you installed when you ripped out all the carpet is probably starting to look a little rough. Not to mention, the advances in durability and looks have come far in the last several years. A full kitchen reno won’t be in the cards at a mid-level price point, but you might be able to switch up the counter or look at refacing the cabinets. With two-toned cabinetry continuing to be on-trend, you may be able to change just the upper or lower cupboards for a refresh on the cheap(er).

Your considerations will be different based on if you plan to live in your house for years to come or if you are looking to sell in the next year or two. If you are in your forever home, you can indulge every quirk of your personality and spend your money customizing the space. If you are renovating with a seller’s eye, a mass appeal will be a more significant factor. You know best what your house needs, but bathrooms are it when it comes to returns on investment. Adding a bathroom can add an extra 5% to your home’s value, and if you aren’t heading to the spa at Baden-Baden, maybe you can bring the spa to you

There’s no shortage of ways to spend your vacation fund at home. Keeping your money in a Tax-Free Savings Account (TFSA) until the travel skies are friendly again is always an option. But, if you want to get some enjoyment out of the money now, investing it in your home is a great prospect. And I can guarantee you won’t lose your luggage.

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Jen Mallia

Jen Mallia is an Edmonton writer who is passionate about travel, Netflix, and raising good humans (not always in that order!) She has written for numerous print and online publications and is always on the lookout for the next great story — around the corner or across the globe! You can follow her adventures on Instagram and Twitter: @jen_mallia