Financial advisor calls on clients to be flexible with their summer getaway plans
While inflation and affordability concerns remain top-of-mind for countless Canadians, that hasn’t stopped them from wanting to scratch their summer travel itch. But according to one financial advisor, clients should consider some important questions before making their escape.
“I'm still seeing people traveling a lot. And in some cases, they are worried about the cost” says Andrea Andersen, financial advisor at Edward Jones. “But, they still want to travel, so they still pay.”
While the years of pandemic lockdowns have retreated well into the rearview mirror, Canadians’ thirst for travel is still alive and well.
According to a recent report from RBC, more Canadians opted to take costly flights rather than drive in the first part of 2023; the number of those returning from trips abroad via a land port plummeted 21% compared to the same period last year, while the number of returning Canadian flyers soared 42%.
At her practice, Andersen says clients would oftentimes have a particular travel destination in mind as they attend a special event – a family reunion abroad, for example, or a wedding. But for those who don’t have a particular agenda, she says a little flexibility can go a long way.
“I’d encourage clients to not pick the trip based on the site, and just shop around,” she says.
Focusing on Canadian flyers, RBC found roughly 134% more Canadian residents came back from the U.S. via air travel in the first part of this year compared to the same period in 2019. While that could be due to angst over airport disruptions, a comeback in conferences, or people’s increase ability to work from anywhere, flights to the U.S. are also shorter and more affordable.
For Canadian travellers, quality also appeared to be more front-of-mind than budget concerns. Based on an analysis of Google Trends data, RBC found more Canadians searched for the “best” travel options in 2023, compared to those who Googled “cheap” options.
“There are great opportunities to set a Google alert, or use other tools to get notified when airline prices drop,” Andersen adds. “Unless you’re picking an ultra-luxurious location, you can still find some good deals. … There’s really no reason to overpay.”
Across the board, she says clients have a hard time setting a travel budget. While some might have traditionally put their summer getaway on a credit card, the current high levels of interest rates make it an extremely expensive proposition.
Recent data from Equifax suggests more Canadians are already leaning on plastic to get by even on items outside travel. Compared to before the pandemic, it found spending on credit cards has increased by 21.5%.
“If you don’t pay that credit card bill off in the first little bit, you could end up paying double the cost of your trip just on interest,” Andersen says.
To avoid that pain, Andersen encourages clients to reflect on what they’re actually spending their hard-earned money on, and what it is they really need to do. Some might come into a meeting wanting to visit an exotic and luxurious destination, only to later realize that they’re happy to escape somewhere that’s closer to home.
“That's the benefit of having a professional who can dig into these conversations with you and say, ‘What do you really need? Do you need the beach vacation? Or do you need just to get away?’” Andersen says.
“If possible, you’ll want to find someplace that will match or mimic the experience you want for a quarter of the price,” she says. “Nobody wants to be in the position of deciding between paying for their mortgage and paying off their credit card.”
