7 MONEY MOVES GEN Z MUST MAKE NOW IF THEY WANT TO TRAVEL IN RETIREMENT

Like every other generation before, Gen Z is diverse and it would be a mistake to say that they’re all the same in terms of values. That said, it’s fair to say that they have tons of things in common, including a strong desire to see the world. Overall, this young cohort cares about and prioritizes travel.

According to the 2023 Global Travel Trends Report by American Express Travel, 79% of Gen Z respondents said that leisure travel is a vital part of their budget. Gen Zers are, overall, so committed to traveling that they’re determined to do it regardless of whether they have much money to spare.

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Why not surrender some of your hard-earned savings to travel when you’re young enough to not care too much? It makes sense in the short term — but many Gen Zers are looking past that. Though they’re all about spending money on exotic experiences, they’re also well aware of the fact that they’ll need an ample nest egg for retirement.

So, the question is: How can Gen Z get in a financially safe place so that, when they do retire, they have enough money to travel as they please then, too?

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Make a Plan — and Get Specific

Gen Z’s first step in planning for travel in retirement is to make a plan. Know and visualize that travel will be a factor in your overall retirement. But don’t leave it at that. Get specific.

“If you know traveling will be at the top of your retirement bucket list, the more specific you can get about your plans the better,” Tiana Patillo, CFP, financial advisor manager at Vanguard. “For instance, your plan can look significantly different if you’re planning to travel internationally versus domestically, and especially considering your traveling cadence (i.e., once a month versus twice a year).”

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Build a Budget That Is Compatible With Your Travel Ambitions

You may think you don’t have to start thinking about budgeting for your retirement travel budget yet; think again.

“Another key move is building a budget that balances today with the future,” said Erika Kullberg, a personal finance expert, attorney, money influencer and founder of Erika.com. “Make sure that you’re allocating a sensible percentage of your income toward saving for the future, as well as enjoying your life today. Remember that budgeting is a muscle, so getting good practice now will set you up well for the rest of your life.”

Get Serious About Investing

Most Gen Zers haven’t yet amassed a ton of wealth, but that doesn’t mean they don’t have enough to get serious about investing. And they can start small — but time is key.

“Investing doesn’t mean you have to contribute large amounts to different organizations,” said Kristy Kim, CEO and founder at TomoCredit. “Remember, compound interest is your best friend. The earlier you start investing, the more your money will grow over time, allowing for a travel-filled retirement.”

Build a Robust Emergency Fund

If you want to travel with comfort in retirement, you need to ensure your bases are covered. Have an ample emergency fund, always.

“An emergency fund keeps stress down and prevents you from dipping into your savings or investments when unexpected expenses arise,” Kim said. “Keep in mind, a high-yield savings account (HYSA) should always be your go-to tool for building an emergency fund. You can earn high interest while continually growing your fund.”

Create Diverse Streams of Income

Gen Z is no stranger to the concept of balancing, say, a full-time job with a side hustle. This is good, because they may need to diversify their income streams if they want a retirement that is cushy enough to allow for travel.

“Side gigs, freelancing or even renting out property can help you generate additional income, potentially bringing your travel retirement closer than expected,” Kim said.

Double Down on Retirement Contributions

Everyone should be doing this anyway, but it’s imperative for the traveling Gen Zer: Be aggressive in saving for retirement and double down on contributions to your retirement plans.

“The sooner (and more) you can contribute to retirement today, the more time your money can grow, thanks to the power of compounding,” Patillo said. “You can consider contributions to your retirement account as paychecks to your future self that you can cash in when you retire.”

Patillo generally recommends saving between 12%-15% of your income (including any employer matches) in your employer sponsored plan — and if you can max out, do it.

“Consider also saving extra income like bonuses in your retirement account — a little sacrifice now can equate to more traveling in your future,” Patillo said.

Eliminate High-Interest Debt

Finally, Gen Z needs to steer clear of high-interest debt (the kind typically associated with credit cards). Whatever debt they have there, they need to wipe out ASAP.

“Remember the higher your debt payments are when you retire, the less you’ll have to spend on other things like traveling the world,” Patillo said. “Therefore, keep debts to a minimum and consider paying them off in full before retirement.”

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This article originally appeared on GOBankingRates.com: 7 Money Moves Gen Z Must Make Now If They Want To Travel in Retirement

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