Average Americans may be spending too much money right now

Summer is often a busy time — the warm weather entices people to maximize their time by booking vacations, going to concerts, and enjoying outdoor seating at restaurants.

However, these outings can add up quickly. Though inflation has cooled from its 9% high in June 2022 , prices themselves are not decreasing (just rising at slower rates), and consumers have taken the brunt of the hardship.

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Despite these challenges, Americans are still committed to spending on leisure activities. According to Bank of America’s 2024 Summer Travel Survey , about three-quarters (72%) of respondents were planning a summer trip. Though there is a strong travel demand, experts don’t anticipate Summer 2024 to see as large of a boost in spending as it did last year.

Still, younger consumers especially anticipate splurging: One-third of Gen Z expects to spend more this summer than last summer, despite most households tightening their belts on outings and experiences.

Consumers are unwilling to cut summer travel budgets

Eighty-one percent of U.S. consumers noted that inflated transportation and accommodation prices won’t deter them from traveling this year. Though 20% expect to take shorter trips and 18% will plan less expensive vacations, it’s clear that Americans won’t be cutting out travel entirely in the face of inflation.

Travel budgets have increased roughly 18% year-over-year from 2023, due to inflation driving up prices overall. However, many are trying to curtail their spending as best as possible: Eighty-four percent of people have created a travel budget or spending limit.

However, only 15% report actually sticking to their spending limit.

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Economists have coined the term “funflation” to address the rising cost of recreational activities and vacationing. Experts note that the pandemic has created a years-long spending spillover due to pent-up demand and a feeling of missing life events and experiences during lockdowns.

Thirty-eight percent of adults plan on taking on additional debt to travel, dine out, and see live entertainment such as concerts and sporting events. Many people are more focused on enjoying the here and now than planning for the future. And experts don’t anticipate this trend changing in the foreseeable future.

Younger generations are leading in discretionary spending

According to an international McKinsey study , 66% of respondents report being more interested in travel than they were pre-pandemic. This desire to travel and spend more on entertainment is particularly pronounced among Gen Z and Millennials.

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Many young people are willing to take on additional debt to have a fun summer. Forty-two percent of Gen Z and 47% of Millennials are willing to take on more debt to finance their Summer 2024 travels, far more than Gen X and Baby Boomers.

In keeping with this mindset, 40% and 39% of Gen Z and Millennials, respectively, spend on travel regardless of their financial situation. There are many compounding factors at play, but experts cite pent-up post-COVID demand, a lack of confidence in the economy, and concerning geopolitical events as driving this focus on enjoying the present moment.

There are still ways to enjoy your summer while staying mindful of your finances. Katie Kelton , Bankrate’s Senior Writer, Credit Cards, notes a few tips for staying savvy this summer:

• Use a travel credit card to maximize rewards: If you can afford to pay off your balance, using a travel card is a great way to save on foreign transaction fees and travel insurance.
• Consider domestic travel over international trips: Domestic destinations can save you time and money due to reduced travel times and associated costs.
• Look into weekend staycations: If you’re struggling financially but would like some time away to relax, a day trip or local weekend getaway may scratch the travel itch without breaking your budget.

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